Doubts About China’s Economic Data

The Chinese government reported 5% economic growth for 2024, aligning with the target set by the National People’s Congress. According to official statements, this was mainly driven by stimulus measures in the final quarter and strong exports. However, experts like the economists at the Rhodium Group estimate actual growth for 2024 at only 2.4% to 2.8%.

The researchers question the need for extensive stimulus measures if the economy is growing as reported. The government has cut interest rates, increased public spending, and launched a large program to refinance local government debt—actions that suggest deeper economic issues.

Further doubts arise from discrepancies in the data. While reports claim rising investments, cement and asphalt production decreased significantly, and diesel consumption plummeted. Additionally, the real estate market remains in crisis, with investments dropping by 10.6% compared to the previous year. Local governments, burdened by high debt levels, have limited capacity to invest.

Private consumption also shows signs of weakness. Inflation remained extremely low, e-commerce sales stagnated, and consumer confidence hit a record low. German companies in China are also increasingly critical of the economic situation, revising their 2024 expectations downward.

For 2025, China is targeting another 5% growth, but experts consider this unrealistic. Analysts project growth between 3% and 4.5%, driven by government support. The ongoing real estate downturn and potential U.S. trade tariffs could further strain the economy, necessitating additional measures.

Source: NZZ