China’s economic growth showed signs of slowing in the final quarter of 2024, with GDP expanding by an estimated 4.8%, according to data released by the National Bureau of Statistics (NBS) on February 8, 2025. This marks a deceleration from the 5.2% growth recorded in Q3, raising concerns among economists and policymakers about the resilience of the world’s second-largest economy amid ongoing domestic and international challenges.
Economic Growth Moderates Amid Lingering Headwinds
The slowdown comes as China faces a complex mix of factors weighing on its economic momentum. Key sectors such as manufacturing and exports have been impacted by weaker global demand and supply chain disruptions, while domestic consumption growth has shown signs of tapering off after a strong rebound post-pandemic. Analysts note that uncertainties surrounding global trade tensions, rising borrowing costs, and tightening regulations on tech and property sectors have all contributed to the subdued pace.
“China’s 4.8% GDP growth in Q4 indicates a soft landing scenario, but it is clear the economy is encountering significant headwinds,” said Dr. Mei Li, an economist at the Asia Economic Research Institute. “Policymakers will need to carefully balance stimulus measures with structural reforms to sustain growth without overheating financial markets.”
Sector Performance Highlights
Manufacturing output grew by a modest 3.5% year-on-year in Q4, down from 4.1% in the previous quarter. Export growth slowed to 2.9%, reflecting subdued demand from key markets including the European Union and the United States. Meanwhile, the services sector, which accounts for over half of China’s GDP, expanded by 5.4%, supported by recovery in domestic consumption and the digital economy.
Investment in fixed assets, a traditional driver of China’s growth, rose 4.2%, slowing from earlier quarters as the real estate sector continued to grapple with regulatory tightening and financing constraints. Retail sales growth moderated to 3.8%, suggesting cautious consumer spending amid inflationary pressures and rising living costs.
Government Response and Policy Outlook
In response to the slowdown, the Chinese government has signaled readiness to implement targeted stimulus measures. The People’s Bank of China (PBOC) recently cut the benchmark lending rate by 15 basis points to 4.05%, aiming to ease borrowing costs and encourage investment. Additionally, local governments are expected to accelerate infrastructure spending to support economic activity.
“Monetary easing combined with fiscal support will be crucial in navigating this phase of slower growth,” noted Wang Jun, a senior analyst at Shanghai-based financial advisory firm Capital Insight. “However, policymakers must avoid excessive stimulus that could exacerbate debt risks.”
Global Implications
China’s growth trajectory remains critical for global markets given its role as a major driver of commodity demand, trade, and investment flows. A slower Chinese economy could weigh on commodity exporters such as Australia and Brazil, while global supply chains may experience further adjustments amid weaker export growth.
Investors will closely watch upcoming economic indicators and policy announcements for signs of how China plans to stabilize growth in 2025. The International Monetary Fund (IMF) recently revised its forecast for China’s full-year GDP growth to 5.1%, down from earlier projections, citing external uncertainties and domestic challenges.
Outlook for 2025
Looking ahead, economists remain cautiously optimistic about China’s growth prospects, expecting a gradual stabilization driven by policy support and continued urbanization. However, risks such as geopolitical tensions, demographic shifts, and financial vulnerabilities could temper the pace.
“The growth slowdown is a reminder that China’s economic model is evolving, with greater emphasis on quality and sustainability rather than headline GDP figures,” Dr. Mei Li added. “Investors and businesses should prepare for a more complex but potentially more resilient growth environment.”
This article is for informational purposes only and does not constitute financial advice.
