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China’s economy grew 5 percent last year on the back of a surge in manufacturing, official data showed, as companies prioritized exports in anticipation of higher US tariffs and as Beijing stepped up efforts to to encourage.

the eCONOMY It “recovered significantly” in the fourth quarter of 2024, the National Bureau of Statistics said, growing 5.4 percent annually and rebounding from slower growth in the third quarter.

“With a package of incremental (stimulus) policies . . . Confidence has been effectively strengthened and the economy has recovered significantly,” the NBS said in its 2024 GDP data release on Friday.

The annual figure, which slightly exceeded economists’ forecasts of 4.9 percent, followed last year’s growth of 5.2 percent and was the lowest since 1990, excluding the years distorted by the coronavirus pandemic.

The data comes as Beijing tries to revive strong growth in a two-speed economy, where strong exports and manufacturing offset weaker sentiment at home.

In September, the central bank announced monetary easing and support for the stock market. Beijing too launched a program to refinance local government debt and accelerate stimulus spending aimed at infrastructure and other areas.

But economists worry that China is at risk of entrenched deflation. Producer prices have been in negative territory for more than two years, and consumer prices managed to grow by just 0.1 percent in December.

NBS director Kang Yi told a press conference that 2024 could be “described as more turbulent, marked by intensifying geopolitical conflicts and growing trade protectionism”.

Analysts expect Beijing to set its official growth target for 2025 at around 5 percent for the third year in a row when parliament meets to rubber-stamp in March, although trade expected to face challenges due to incoming US president Donald Trump’s threats of higher tariffs.

“The adverse effects of the external environment are deepening. Domestically, insufficient demand continues,” Kang said, adding that “employment and income growth” are under pressure.

Retail sales grew 3.5 percent last year as consumer confidence remained weak amid a prolonged housing slump, while industrial output rose 5.8 percent thanks to strong manufacturing growth.

Residential property prices fell in China’s biggest cities, but new home prices rose in Shanghai.

In another sign of the country’s long-term structural challenges, China’s population will shrink by nearly 1.4 million in 2024, the third consecutive year of decline, as births eased from last year. year to 9.54 million exceeded by 10.93 million deaths.

While China’s economic growth beat expectations, the headline figure “masked some underlying weaknesses”, said Frederic Neumann, HSBC’s chief Asia economist.

“The surge in growth was driven by industrial production, which showed support from the frontal loading of exports in anticipation of US import restrictions,” said Neumann. “It will inevitably lead to a charge as US import restrictions begin to bite.”

China’s trade surplus with the rest of the world reached a record nearly $1tn in 2024, customs figures showed last week, thanks to strong export growth as Chinese manufacturers boosted output to offset sluggish domestic demand. Import growth remained more modest.

“The current Achilles heel of the Chinese economy is the reluctant consumer,” Neumann added. “All of this points to the need for more stimulus, especially the need to support the spending power of consumers.”

The release also underscored doubts about China’s official data, which some analysts are increasingly concerned do not reflect underlying economic weakness.

“The Chinese government’s apparent achievement of its growth target is a Pyrrhic victory that further undermines the credibility of official data and, at best, reflects an economy still plagued by underlying weaknesses and loss of trust in government policy-making,” said Eswar Prasad, professor at Cornell University and senior fellow at the Brookings Institution.

Morgan Stanley analysts said the better-than-expected growth in the fourth quarter “may be short”, and may soften from the second quarter due to export front-loading and insufficient which stimulus measures.

“We think better data is likely to have reduced Beijing’s sense of urgency, and policy may continue to undershoot on the housing and social welfare front,” they wrote in a note.

China’s CSI 300 index of blue-chip companies listed on the mainland rose 0.5 percent in morning trade after the data release, after opening lower earlier in the day.

The benchmark is still down about 14 percent from its peak on Oct. 8, when stimulus policy announcements sparked a stock rally.