China 2024: Resilience, Recovery, and New Economic Frontiers

What have driven China's resilience? How have policies shaped the growth? What can the world expect next?

China's economy in 2024 demonstrated remarkable resilience and adaptability amid a complex domestic and global landscape.

The economic trajectory was marked by steady progress, supported by a robust package of measures. Industrial output maintained growth, with the whole year growth forecast reaching 5.7%. The new energy vehicle (NEV) sector delivered strong results, with sales exceeding 1.5 million units in November, a 47.4% increase from the previous year. The real estate market showed signs of stabilization amid restructuring, reflecting the impact of targeted government-led reforms. Measures to promote high-quality development and drive innovation further bolstered the economy. Fiscal boost and market-oriented reforms played a critical role in strengthening domestic confidence and maintaining economic stability.

The global significance of China's economic performance is profound. Expanding high-standard opening up measures, China further integrated with global markets through initiatives like the Belt and Road Initiative and the Regional Comprehensive Economic Partnership. By actively engaging in global trade and investment frameworks, the country not only ensured sustainable domestic growth but also created avenues for international collaboration.

Notably, China's economic progress has had a substantial impact on global growth. In 2024, China's economy is expected to contribute close to 30% of global growth, highlighting its pivotal role in the international economic landscape. This contribution underscores the importance of China's economic policies and performance in influencing global economic trends and stability.

In areas of heightened domestic and international interest - consumption, foreign investment, real estate, and green development - China has made significant strides, warranting a deeper exploration of these advancements.

Consumption Recovery: Policy and Progress

Despite persistent skepticism about China's consumption prospects, this year has proven otherwise, with consumer spending not only on the rise but also showcasing fresh highlights.

While challenges such as subdued consumer sentiment and the ongoing adjustment of the real estate sector have been frequently cited, this narrative doesn't fully capture the complexity of the situation.

On the brighter side, highlights such as the steady development in services and tourism, alongside the growth in large-scale goods trade-ins, paint a more promising picture - one that merits further discussion to better understand their implications.

In 2024, the Chinese government introduced a series of both immediate- and long-term initiatives to tap into the country's immense consumption potential. These efforts encompassed enhancing fiscal investment, raising household incomes, dismantling market barriers, and exploring new avenues for consumption through technological advancements and deeper market opening.

Certain policies have already demonstrated their effectiveness. A notable example is the consumer goods trade-in initiative, supported by 150 billion yuan ($20.55 billion) raised through ultra-long special treasury bonds allocated to local governments for its implementation.

The effects are evident in the rising expenditures on home appliances, audiovisual equipment, furniture, automobiles, and construction and decoration materials. Notably, sales of home appliances and cars increased by 22.2% and 6.6%, respectively, in November.

Broader economic indicators suggest an optimistic outlook. In October, e-commerce logistics hit a five-year high in business volume, while spending on consumer services gained fresh momentum, particularly in the hospitality and dining sectors.

Domestic tourism thrived in the past year, not only in terms of numbers but also in its diversity. Emerging trends include a growing interest in lesser-known cities and counties, themed tours that blend cultural heritage with local flavors, the rise of smart tourism, and a surge in spending driven by Olympic-related activities.

Inspired by the Paris 2024 Olympics, Chinese audiences have shown greater enthusiasm for sports and celebrity-endorsed designer goods. In July, badminton orders rose 90% year-on-year, while tennis-related group purchases surged 172%, according to the e-commerce platform Meituan.

Placing China in a global perspective offers meaningful insights, as its consumption growth reflects the effectiveness of policies and consumer confidence that is far more resilient than portrayed by some foreign media.

McKinsey's ConsumerWise survey in August showed that 59% of Chinese consumers anticipated an economic rebound within months, significantly outpacing optimism in the United States, the United Kingdom, and Japan, even prior to the implementation of additional pro-growth measures.

The country has consistently introduced pro-consumption policies. In November, the Ministry of Commerce announced initiatives to boost the debut economy, strengthen the wholesale and retail sectors, and support pilot projects for modern commercial circulation in 20 cities, including Shanghai and Tianjin. The ministry also piloted reforms in automotive sales and launched action plans to promote health-related consumption.

More policies aimed at unlocking consumption potential are expected in 2025. The tone-setting Central Economic Work Conference, held in mid-December, identified boosting consumption as a key economic priority for the coming year, with measures such as creating diversified consumption scenarios, expanding service consumption, and advancing cultural tourism development.

Foreign Investment: Further Opening Up and Innovation

In a year marked by growing protectionism and attempts toward economic "decoupling" on the global stage, China remains a popular investment destination.

French pharmaceutical giant Sanofi reaffirmed global investors' confidence in the Chinese market by announcing a nearly 1-billion-euro investment in December to build a new insulin production base in Beijing - the company's largest single investment in China since 1982.

The investment follows China's announcement of further opening up in the healthcare sector, including a plan to allow the establishment of wholly foreign-owned hospitals in some major cities, including Beijing and Shanghai, as well as the island province of Hainan, to modernize healthcare services and address rising demand.

Additionally, foreign-invested enterprises are now allowed to pursue the technological development and application of human stem cell research as well as gene diagnosis and treatment for product registration, market launch, and production in the free trade zones of Beijing, Shanghai, Guangdong, and Hainan.

Like Sanofi, British biopharmaceutical company AstraZeneca considers China an important growth engine.

"We are here because China is at the forefront of using artificial intelligence, biotechnology, and renewable energy to shape the future of healthcare, and we believe that Chinese-born innovation can help millions of patients worldwide," said Pascal Soriot, CEO of the company.

Earlier this year, AstraZeneca signed an agreement to invest $475 million in building a new small molecule factory in Wuxi, Jiangsu Province, focusing on sustainable manufacturing. In February, the company designated Shanghai as its fifth global strategic site, and last year, it announced a $700 million investment in an inhaled medicines manufacturing facility in Qingdao.

An increasing number of companies are joining AstraZeneca and Sanofi in expanding their presence in China to seize growth opportunities and share in the dividends of the country's continued high-standard opening up.

In the first 11 months of the year, a record 52,379 foreign-invested companies were established in China, up 8.9% from the previous year.

Foreign investors are drawn to China for a variety of reasons: its supply chain advantages, innovation-driven growth model, and comprehensive offerings that provide everything a company might need.

It is the only country in the world with every industrial category classified by the United Nations, with its manufacturing added value constituting roughly 30% of the global total.

As China pursues an innovation-driven growth model, the country's prominence in the global innovation landscape continues to increase. The Global Innovation Index 2024, released by the World Intellectual Property Organization, ranks China 11th among the world's most innovative economies, up one spot from the previous year. This has made China one of the fastest risers over the past decade.

In November, foreign direct investment in the Chinese mainland in actual use climbed 6% from the same period last year.

To help foreign investors capitalize on its supply chain, market, and innovation advantages, China has taken significant steps to further open up in 2024. Key measures include expanding industry access and launching pilot programs to attract global investment.

Notably, the 2024 national negative list for foreign investment, effective Nov. 1, eliminated all market access restrictions for foreign investors in the manufacturing sector, marking a groundbreaking move for global manufacturers entering China's economy.

Property Market: Policy-Driven Stability and Renewed Confidence

China's real estate sector commands both domestic and global attention in 2024, given its profound influence on macroeconomic trajectories, consumer behavior, and broader economic prospects. Clearer signs of recovery have emerged, bolstered by well-targeted policies that have strengthened confidence and rekindled demand.

Chinese authorities have rolled out a series of heavyweight measures this year to bolster stability in the real estate market, featuring eased restrictions and enhanced credit support.

In late September, a key meeting convened by the Political Bureau of the Communist Party of China Central Committee underscored the urgency of stabilizing the property market and reversing its downturn.

The meeting called for adjustments to housing purchase restrictions, reductions in mortgage interest rates, and improvements to land, fiscal, tax, and financial policies.

Responding to these directives, authorities have lowered home-buying costs, ease mortgage burdens, and extended critical support to first-time buyers and those seeking to upgrade their housing.

On Sept. 29, the central bank instructed commercial banks to cut interest rates on existing mortgages, including first and second home loans, by no less than 30 basis points below the loan prime rate by Oct. 31, aiming to alleviate financial pressure on homeowners.

Subsequently, major cities such as Beijing, Shanghai, Guangzhou, and Shenzhen introduced tailored measures to boost their local property markets, marking another round of policy adjustments.

These efforts build on measures announced in May, which included cutting minimum down payment ratios, establishing a relending facility for affordable housing, and pledging to complete unfinished residential projects.

The impact of these policy measures is becoming increasingly evident. In November, the year-on-year decline in commercial residential property prices across 70 large and medium-sized cities narrowed, pointing to early signs of recovery and stabilization in the housing market.

October also saw notable improvements in the property sector's performance, with the purchasing managers' index for business activity rising by 2.5 percentage points month-on-month, while the business expectation index recorded a 1.8 percentage point increase, reflecting growing optimism among market participants.

These encouraging signs suggest that the real estate market is beginning to show a rebound after three years of adjustment. "The real estate market is starting to bottom out as the policies take effect," according to China's Ministry of Housing and Urban-Rural Development.

Echoing this sentiment, the National Bureau of Statistics noted that the positive changes suggest that "as policy impacts continue to unfold, the momentum for market stabilization will strengthen." Together, these statements reflect growing confidence in the market's recovery trajectory.

Green Development: Conservation, Innovation, and Global Collaboration

In Xiatanwei Mangrove Park, Xiamen, an 85-hectare man-made mangrove forest reflects China's efforts to expand mangrove coverage. Official data shows that China's mangrove area has reached 29,200 hectares, making it one of the few countries globally to achieve a net increase.

Stories of flourishing greenery like this are unfolding across China.

For decades, China has been planting trees around the edges of the Taklamakan Desert in the northwest, creating a 3,000-kilometer-long green barrier.

This year, thousands of workers were mobilized to close the final gap. On Nov. 28, the last segment of trees was planted in Yutian County on the southern edge of the desert, completing the continuous "green belt" encircling the desert.

Official data shows that since the launch of the "Three-North Shelterbelt Program," the tree coverage rate in northern China's arid regions has risen from around 5% to approximately 14%. In some areas, this "Green Great Wall" has even pushed back the desert, achieving "green advancement and sand retreat."

In Kunming, the provincial capital of Yunnan in the southwest, years of dedicated pollution control and water restoration at Dianchi Lake have significantly boosted biodiversity. Since 2007, the number of plant and bird species around the lake has grown to 303 and 175, respectively, while fish species have increased to 26.

The year 2024 marked steady momentum in China's green transition, with measured progress across areas such as green energy production, government planning, ecological conservation, and consumption upgrades. Internationally, the country has been steadily enhancing its collaboration with global partners to advance green transition technologies.

Electric vehicles (EVs) have emerged as another emblem of China's green transition, with significant growth in 2024. According to The Guardian, China captured 76% of the global EV market share in October, dominating a sector where most sales come from China, the EU, and the United States. In the first 11 months of the year, total retail sales of new energy passenger cars in China reached 9.59 million units, marking a 41.2% year-on-year increase, according to the China Passenger Car Association.

EVs are just one aspect of China's clean energy development. In July, the country's installed capacity for solar and wind power reached 1.206 billion kilowatts, achieving a target originally set for 2030 ahead of schedule.

Data shows China's clean energy generation in the first half of this year matched the total energy generation of the United Kingdom during the same period last year.

China's wind and solar power output continues to grow at a pace far exceeding other countries and regions, reaffirming a clear trend: China remains a global leader in clean energy.

China's international collaboration in green industries is expanding at an impressive pace.

According to the Financial Times, growing demand for green technology in Saudi Arabia has led to a surge in Chinese exports and investments, redefining a relationship once centered on oil trade.

Data shows that China has become Saudi Arabia's largest source of greenfield investments, with a total of $21.6 billion between 2021 and October 2024, approximately one-third of which was directed toward clean technologies such as batteries, photovoltaics, and wind power.

In addition, China actively participates in global emission reduction efforts and continues to engage in South-South cooperation on climate change.

According to the Ministry of Foreign Affairs, as of November 2024, China has signed 53 climate change cooperation memorandums of understanding with 42 developing countries and carried out nearly 100 projects focused on climate change mitigation and adaptation.

These initiatives have helped least-developed countries, African nations, and small island states enhance their capacity to address climate challenges, contributing to global efforts to combat climate change.

China 2025: What to Expect

China is most likely to achieve its annual growth target of around 5% for 2024, setting the stage for a strong start to 2025 with solid economic momentum.

Looking ahead, the tone-setting meeting in December clearly signaled the Chinese leadership's confidence and determination to further boost economic recovery and navigate a challenging global environment, with a more proactive fiscal policy alongside a moderately loose monetary policy to be adopted for the first time.

As a result, institutions such as the World Bank and international credit rating agency Moody's have recently raised their forecasts for China's economic growth in 2025.

The country's economic impact on the global economy may be greater than you expect. Bloomberg, based on the latest IMF projections, calculates that China will be the largest contributor to global growth over the next five years, accounting for 21% - exceeding the combined contribution of G7 countries.

A report by McKinsey Global Institute estimates that by 2040, the integration between China and other global economies could generate $22 trillion to $37 trillion in economic value, equivalent to 15% to 26% of global GDP.

For a global economy struggling with sluggish growth, China's resilient, dynamic, and high-potential economy increasingly stands out as a source of hope.

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