China’s economy remained resilient in 2024 despite subdued consumer and business sentiment. The country achieved 5.0 percent GDP growth and a 3.5 percent increase in retail sales, demonstrating steady economic development. Spending on essential categories such as food (10 percent growth) and home appliances (12 percent growth) increased, while electric vehicle sales surged by 40 percent, making up nearly half of new car sales. However, non-essential spending declined, with consumers delaying purchases of clothing and cosmetics.
Investment activity, however, remained weak, reflecting cautious business sentiment. Foreign direct investment fell by 27 percent, dipping below 2019 levels, while private equity and venture capital activity also declined. Domestic private enterprises showed reluctance to invest, with fixed asset investments stagnating over the past two years. This hesitancy contributed to persistent youth unemployment, as state-owned enterprises took the lead in investments. The key challenge for 2025 will be restoring confidence among investors and businesses while identifying opportunities for sustainable growth. Despite the cautious outlook, the final quarter of 2024 saw retail sales rise by 4 percent, indicating early signs of improvement. Moving into the Year of the Snake, China’s economy faces both challenges and opportunities, requiring a renewed focus on strengthening consumer confidence and fostering investment.
