Business > Top Business
China hits target but outlook clouded

BEIJING — China's economy grew 5 percent last year, matching the government's target, but in a lopsided fashion, with many people complaining of worsening living standards as Beijing struggles to transfer its industrial and export gains to consumers.
The unbalanced growth raises concerns that structural problems may deepen further in 2025, when China plans a similar growth performance by going deep into debt to counter the impact of an expected US tariff hike, potentially as soon as Monday when Donald Trump is inaugurated as president.
China's December data showed industrial output far outpacing retail sales and the unemployment rate ticking higher, highlighting the supply-side strength of an economy running a trillion-dollar trade surplus, but also its domestic weakness.
The export-led growth is partly underpinned by factory gate deflation, which makes Chinese goods competitive on global markets, but also exposes Beijing to greater conflicts as trade gaps with rival countries widen. Within borders, falling prices have ripped into corporate profits and workers incomes.
Andrew Wang, an executive in a company providing industrial automation services for the booming electrical vehicle sector, said his revenues fell 16 percent last year, prompting him to cut jobs, which he expects to do again soon.
'The data China released was different from what most people felt,' Wang said, comparing this year's outlook with notching up the difficulty level on a treadmill.
'We need to run faster just to stay where we are.'
If the bulk of the extra stimulus Beijing has lined up for this year keeps flowing towards industrial upgrades and infrastructure, rather than households, it could exacerbate overcapacity in factories, weaken consumption, and increase deflationary pressures, analysts say.
'Deflationary pressure will dampen investment sentiment,' said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, who expects slower 2025 growth.
'It will also be hard for China to keep the export strength amid the uncertain geopolitical environment.'

'Unease'

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