On Friday, China will be the first major economy to report its China Q4 GDP data for the last quarter of 2024. There will likely be a lot of attention on the data, not just because it’s the world’s second-largest economy, but might foreshadow what could happen with other major economies, as well.
interest is that China embarked on a massive stimulus program in the final quarter, and the GDP data could be an important indicator of whether that was successful. Markets have largely been disappointed by the announcements from Chinese officials about stimulating the economy, so this could be an opportunity to reassure markets about growth. On the other hand, if the results are too good, then it might lead to worries that Beijing will pull back on stimulus efforts.
What to Look Out For in China Q4 GDP Data
Chinese authorities set out last year with a goal to grow at an annual rate of around 5,0%. Meeting growth goals has been a key element of fiscal policy, and a failure to do so would be expected to have geopolitical implications. That is on top of China being a major importer of raw materials and technological equipment, being the largest trade partner of Asian countries as well as the EU. The slump in China’s economy in the early part of 2024 is seen contributing to Germany’s lack of growth, so signs of a pickup in the Asian giant’s economy might go so far as to support the Euro.
The expectation is that China Q4 GDP data growth will jump to 1.6% from 0.9% in the third quarter. Analysts are mostly attributing that to the effects of the announced stimulus so far. On an annual basis, this would push China’s GDP to 5.0%, from 4.6% reported three months ago, and meet the country’s growth target.
Trouble Still Abounds
While the expectation is that the economic situation in China is improving, other data released around the same time suggests the Asian giant is not out of the woods yet. Chinese Industrial production is expected to modestly accelerate at an annual pace of 5.5% from 5.4% prior, a good sign for raw material exporters. But Australian markets might have less reason to cheer, given that China is also expected to show an acceleration to the downside in its housing market.
The Chinese December house price index is expected to accelerate into the negative at -5.8% from -5.7%. It suggests that the stimulus measures haven’t done much to shore up the fledgling housing market that is seen having precipitated the crisis in China. Housing is one of the biggest users of Australia’s chief export: iron ore to make steel.
And the Future
Even if China manages its 5.0% target for last year, economists believe it can’t be sustained into 2025. The median forecast is for China’s economy to cool down to 4.5% in 2025 and then again to 4.2% in 2026. Part of that, however, might not be in the country’s control, as economists see China facing headwinds due to tariffs imposed by the US.
On the other hand, expectations of slower economic growth have fueled speculation that Chinese authorities will continue to introduce new stimulus measures. But that will have to wait until March, when Parliament is expected to announce its growth target for 2025 – and measures to reach it.