Overcoming Obstacles to Economic Growth

The year of 2024 was an extraordinary one in China’s economic development. Faced with the challenges posed by growing international pressures and mounting domestic issues, the Central Committee of the Communist Party of China (CPC), with Xi Jinping at its core, united all members of the Party and all the Chinese people and led them in responding calmly and adopting coordinated measures in order to overcome obstacles to high-quality economic development. It also continued to chart the course of stability, maintained forward momentum, and introduced new drivers of development.

I. Strengthening the economy and attaining objectives

In 2024, the CPC Central Committee led by Xi Jinping responded proactively and effectively to risks and challenges. It strengthened and developed macroeconomic regulations whenever needed. Of particular note was the package of policies announced at a meeting of the Political Bureau of the CPC Central Committee on September 26, which led to a marked upturn in China’s economic performance, thereby boosting people’s confidence and helping to realize our development goals for the year. 

The overall trend last year was of economic stability 

Preliminary data indicate that GDP reached 134.9 trillion yuan in 2024, a year-on-year increase of 5%, surpassing the 130-trillion-yuan threshold for the first time. This steady increase in GDP raised China’s economic might, scientific and technological capabilities, composite national strength, and living standards to new levels. It also resulted in stronger foundations, an optimized structure, greater sustainability, and more resilience to risk for China’s development. 

Despite lingering structural pressures, employment increased as a result of GDP growth, growing service sector employment, and new modes of employment created by new industries and new forms of business. These factors, together with more effective employment-oriented policies, contributed to the stabilization of the job market. In 2024, the surveyed unemployment rate in cities and towns fell to 5.1%, 0.1 percentage points lower than the previous year, and 12.56 million urban jobs were created, marking the fourth consecutive year that urban job creation exceeded 12 million.

The consumer price index (CPI) rose at a moderate rate of 0.2% in 2024, with core CPI (a better indicator of the relationship between supply and demand) up by 0.5% year-on-year. The fourth quarter saw an uptick in the monthly increase, reflecting an improvement in market supply and demand. 

China’s total volume of trade in goods reached 43.8 trillion yuan in 2024, a new record high, with trade in services remaining brisk. Our foreign exchange reserves at the end of the year stayed above US$ 3.2 trillion. 

China’s economic performance outshone many countries 

Our economic growth rate of 5% was among the highest of the world’s major economies, and it was significantly higher than the projected global growth rate of 3% as well as the projected rates of the US (2.8%), the Eurozone (0.7%) and Japan (-0.2%). China, which is the world’s second largest economy, is expected to continue to account for approximately 30% of world economic growth, making it the largest driver of growth globally. Despite growing unilateralism and a backlash against globalization, we are resolutely pursuing globalization and multilateralism. Based on our strong industrial support capabilities and ever-improving infrastructure, China has maintained its position as the world’s leading manufacturer, trader of goods, and holder of foreign exchange reserves as well as the second largest trader of services, making positive contributions to the global economy. 

II. China’s economic resurgence in late 2024

In response to downward pressures on the economy in the second and third quarters, the CPC Central Committee implemented targeted policies, including strengthening the implementation of existing policies and issuing a series of new policies, which helped to increase demand, accelerate production, and improve market sentiment. Over the year, China’s economic performance started and ended well, with a mid-year dip. In the fourth quarter of 2024, GDP grew 5.4% year-on-year and was up 0.8 percentage points from the third quarter, which proved decisive for realizing annual economic objectives and tasks. 

Domestic demand potential was unleashed 

The main focuses of China’s macroeconomic policies in 2024 were to implement major national strategies and build security capacity in key areas as well as to advance large-scale equipment upgrades and trade-in schemes for consumer goods. The effects of boosting consumer spending, increasing effective investment, and accelerating the transition to green development were increasingly apparent in 2024. In the fourth quarter of the year, we roused the people’s enthusiasm for the consumer goods trade-in schemes, with large retailers’ sales of household electrical appliances and audiovisual equipment, furniture, automobiles, and construction and decoration materials collectively driving an increase in total retail sales of consumer goods of 1 percentage point, a significant improvement on the third quarter. Thanks to the policy encouraging large-scale equipment upgrades, purchases of equipment and instruments registered a year-on-year increase of 15.7% in 2024, with growth accelerating by 9.1 percentage points from the previous year, which amounted to 67.6% of total investment growth.

China continued to forge ahead with progress toward high-quality economic development in 2024. We ensured overall stable performance and steady growth of the economy and accomplished the main goals and tasks for economic and social development in 2024. XINHUA / GRAPHICS BY MENG LIJING AND FANG DONGXU

Economic flows gradually improved 

The effects of policies gradually shifted from demand to production. In the fourth quarter of 2024, the added value of large industrial enterprises and the service sector increased year-on-year by 5.7% and 5.8%, 0.7 and 1 percentage points higher than in the third quarter, respectively. The policy encouraging large-scale equipment upgrades and trade-in schemes for consumer goods promoted rapid growth in equipment and consumer goods manufacturing. The cumulative growth rate of automobile production increased for three consecutive months from October, and annual production of alternative energy vehicles was up 38.7%. Growth in the production of air conditioners, refrigerators, and other home appliances also accelerated, and production of specialized packaging equipment and excavation and earthmoving machinery increased 24.5% and 17.3%, respectively. Driven by the acceleration in production and a rebound in demand, the capacity utilization and production-to-sales ratio of enterprises improved. In the fourth quarter, the capacity utilization of large industrial enterprises was 76.2%, an increase of 1.1 percentage points on the third quarter, and the production-to-sales ratio of large industrial enterprises rose to 98.7% in December.

Market confidence was greatly boosted 

The turnaround in China’s economic performance gradually improved people’s incomes as well as the revenue of enterprises and the government, bolstering market vitality and sentiment. Per capita disposable income nationwide grew by 5.1% in real terms year-on-year in 2024, 0.2 percentage points higher than in the previous three quarters. In October and November 2024, year-on-year decreases in total profits of large industrial enterprises narrowed by 17.1 and 2.7 percentage points, respectively, compared to the previous month. The fiscal revenue growth rate turned from negative to positive in September, and it improved further in October and November. As the effects of new policies materialized, the real estate market stabilized, and stock trading increased. In the fourth quarter, both the area and value of new commercial property sales returned to growth, up 0.5% and 1% year-on-year, respectively, and positive changes in house price stabilization proliferated. Both the volume and value of stocks traded on the Shanghai and Shenzhen exchanges increased in the third quarter, by 1.1 and 1.6 times, respectively. Since the fourth quarter of 2024, the manufacturing purchasing managers’ index (PMI) and the services business activity index have consistently remained above 50%.

Gong Xianzu, head of the division of Experimental Advanced Superconducting Tokamak (EAST) Physics and Experimental Operations, observes data in the control room during an experiment in Hefei, Anhui Province, January 19, 2025. EAST, dubbed China’s “artificial sun,” set a new world record on January 20 by sustaining a steady-state high-confinement plasma operation at over 100 million degrees Celsius for 1,066 seconds. PHOTO BY XINHUA REPORTER DU YU

III. Developing new quality productive forces, growth drivers, and strengths

In 2024, China firmly implemented the strategy for innovation-driven development, promoted new quality productive forces based on local conditions, and boosted the renewal and upgrading of traditional industries while gaining momentum in emerging industries, thereby giving impetus to, and forging new strengths for, high-quality development.

Steady improvements were made in scientific and technological innovation 

In 2024, R&D investment grew, with national spending on R&D exceeding 3.6 trillion yuan and the ratio of R&D investment to GDP reaching 2.68%, 0.1 percentage points higher than the previous year, as China approached the average level of R&D investment of OECD countries. Major scientific and technological breakthroughs were made in areas including integrated circuits, artificial intelligence, and quantum communications. In addition, the Chang’e 6 spacecraft successfully collected the first samples from the far side of the Moon, and the Meng Xiang deep-ocean drilling vessel was commissioned. These achievements raised the bar of Chinese science and technology.

China rose to 11th in the Global Innovation Index, making it one of the fastest rising economies over the past decade, and is home to more top 100 science and technology clusters than any other country. 

China has taken further steps toward developing strong intellectual property capabilities, including accelerating the conversion of patents into productive forces. In 2024, 53.3% of enterprise invention patents had subsequent industrial applications, and there were 1.98 million valid domestic high-value invention patents.

Progress was made in transforming and upgrading traditional industries 

We accelerated technological transformation and equipment upgrading in the industrial sector in order to revitalize traditional industries. In 2024, investment in technological transformation efforts in the manufacturing industry increased by 8% year-on-year, 4.8 percentage points higher than the growth rate of total investment. Focusing on key areas for optimization and upgrading in traditional industries, technology and equipment in raw material industries steadily improved, and the coordinated shift to digital and green modes of production picked up the pace. Energy consumption per unit of added value of large energy-consuming industries, including the chemicals, building materials, iron and steel, and non-ferrous metals industries, decreased year-on-year in 2024. By the end of the year, the numerical control rate of key processes in raw material industries exceeded 75%, fulfilling ahead of schedule the target set for the 14th Five-Year Plan period (2021-2025). 

The strengthening of emerging industries accelerated 

High-tech industries such as aerospace and electronic communications grew rapidly, and the manufacturing industry shifted toward the mid-to-high end of industrial and value chains. 

In 2024, the value-added of large high-tech manufacturing industries grew 8.9% year-on-year, with their share in the total value-added for large industries increasing by 0.6 percentage points compared to the previous year. The development of digital technologies, digital infrastructure, and data resources continued, with the digital economy empowering a myriad of industries and becoming a major buttress and driver for developing new quality productive forces. 

In 2024, the value added of information transmission, software, and information technology services increased by 10.9% annually, with more unmanned aerial vehicles lighting up the night skies and more service robots and smart appliances making their way into people’s homes. 

Green productive forces flourished 

The concept of green development has taken root in people’s minds. We are continuing to develop a green, low-carbon, and circular economy, and there has been an acceleration in applications of advanced green technologies. Moreover, the influence of environmental concepts within economic development keeps growing. 

The alternative energy industry in China is thriving. In 2024 we produced 13.17 million alternative energy vehicles, making China the first country in the world to produce more than 10 million such vehicles in a year. This, in turn, led to rapid growth in the production of charging units and lithiumion batteries in the industrial chain. 

Investment in clean energy increased further, and the development of a system for new energy sources accelerated, with the total installed capacity of wind and solar power exceeding 1.3 billion kilowatts in 2024, fulfilling China’s commitment made at the United Nations Climate Ambition Summit six years ahead of schedule.

IV. Deepening reform and opening up and unleashing development potential

At its third plenary session in July 2024, the 20th CPC Central Committee rolled out a grand blueprint for deepening reform in all sectors and announced more than 300 major reform initiatives, which targeted deep-seated problems restricting socioeconomic development, boosted people’s confidence toward achieving growth, and stimulated internal driving forces and creativity for socioeconomic development.

Comprehensive reform continued 

Reforms in various fields, particularly the economy, were implemented. The shaping of a unified national market accelerated. The systems underpinning the market economy, such as those for property rights protection, market access, fair competition, and social credit, were improved, and the principal role of domestic economic flows was reinforced. 

In 2024, total retail sales of consumer goods totaled 48.8 trillion yuan, and national fixed-asset investment (excluding rural households) reached 51.4 trillion yuan. Domestic demand accounted for 69.7% of the economic growth, indicating that it remains the major driver of the economy. 

Progress was made in developing a high-standard market system; the commitments to both the public and non-public sectors were upheld; and the business environment was optimized. Reforms in key areas, such as state-owned enterprises, fiscal matters and taxation, finance, and science and technology, were implemented in unison, which constantly created new spaces for development. 

Steady progress was made in high-standard opening up 

China is engaging with the global economy and expanding new growth drivers of trade, including giving support to overseas warehouse construction and cross-border e-commerce export, resulting in our exports accounting for a steadily increasing proportion of the international market share. Thanks to our diverse market and expanding circle of friends, China has become a major trading partner of more than 150 countries and regions around the world, and we have signed 23 free trade agreements with 30 countries and regions on all five continents, as part of China’s efforts to open its door wider to the world. 

Consumption is becoming a fundamental driver of China’s economic growth. Seen here is an aerial view of the flower market on Aiguo Road in Luohu District, Shenzhen, January 22, 2025. The week-long 2025 Shenzhen Spring Festival Flower Market officially opened on January 22, drawing large crowds of residents and tourists with its festive atmosphere. PHOTO BY XINHUA REPORTER LIANG XU

High-quality development of the Belt and Road Initiative (BRI) has steadily advanced. In 2024, China’s trade with BRI countries increased 6.4% year-on-year, accounting for more than half of China’s trade for the first time. The annual number of journeys by the China Railway Express increased 10%, with the cumulative total surpassing 100,000. 

We removed all restrictions on foreign investment in the manufacturing sector, further opened up our service industry, and improved the quality of foreign investment, with investment in the high-tech manufacturing industries accounting for 11.7% of total foreign investment in 2024. The policy of visa-free transit was expanded and optimized, which helped to boost the image of China as a welcoming destination. In 2024, more than 20 million foreign nationals enjoyed visa-free entry to China, a year-on-year increase of 1.1 times.

V. Mitigating risks in key areas and ensuring secure development

In 2024, China successfully integrated high-quality development with high-standard security by strengthening security safeguards, particularly in the areas of food, energy and resources, and major industrial and supply chains, as well as mitigating risks in key areas, thereby taking the initiative in stabilizing the economy and responding to risks and challenges.

Food and energy security were strengthened 

Efforts to boost grain production through farmland management and applications of technology were thoroughly implemented, and policies aimed at supporting grain production were enhanced, leading to record output. The year of 2024 saw China’s total grain production reach 706.5 million metric tons, marking the first time production has exceeded 700 million metric tons following nine consecutive years of output over 650 million metric tons. 

The foundations of our energy and resource security were strengthened further, with steady increases in the supply of major energy resources and energy self-sufficiency remaining above 80%. In 2024, raw coal production by large industrial enterprises hit a record high; crude oil production remained above 200 million metric tons for the third consecutive year; production of natural gas grew by 10 billion cubic meters annually for the eighth consecutive year; and electricity generation by large industrial enterprises increased by 4.6%, ensuring adequate power to cover energy needs for everyday work and life in China.

Industrial and supply chain resilience improved 

Focusing on accelerating the development of new productive forces, efforts were made to strengthen the optimization and upgrading of industrial and supply chains, and investment in the manufacturing and high-tech industries increased 9.2% and 8%, respectively, in 2024 compared with the previous year. Strengths in manufacturing were consolidated, with added value reaching nearly 34 trillion yuan in 2024, up 6% on the previous year. The value-added of large equipment manufacturers increased by 7.7%, which gave an apparent boost to upstream and downstream enterprises in the industrial chain. China is the world’s largest producer of microcomputer equipment, cell phones, automobiles, and other major industrial products, with evident advantages stemming from its complete industrial system. New breakthroughs were made in the R&D of key core technologies in vital fields, such as chips, aerospace, and medical care; the proportion of high-end equipment produced domestically increased; and control over industrial and supply chains was strengthened. 

Economic and financial risks were effectively mitigated 

Various localities have implemented city-specific and tailored policies and have continued to optimize real estate policies as part of the battle to ensure the timely delivery of housing projects and to accelerate efforts to foster a new development model for the real estate sector, leading to positive changes in the sector. Proactive steps have been taken to mitigate local government debt risks, with a package of comprehensive and targeted measures introduced to defuse risks. These include a one-off increase of 6 trillion yuan to the ceiling for local government special-purpose bonds to replace existing hidden debts. In 2024, the full 2 trillion yuan quota for defusing debt risks was allocated, creating greater fiscal capacity and enhancing the momentum and vitality of local economic development. A stable financial system was established, with the steady promotion of reforms of small- and medium-sized local financial institutions, thereby preventing systemic risks.

VI. Safeguarding people’s wellbeing

In 2024, all sectors of society continued to safeguard and improve people’s wellbeing in the course of pursuing development and strived to keep employment stable and increase people’s incomes. Social policies aimed at meeting people’s basic needs were strengthened, social security and basic public services were improved, and people’s sense of fulfillment, happiness, and security increased. 

People’s incomes grew steadily 

The stable economic and employment environment drove people’s incomes higher. In 2024, the per capita disposable income of residents nationwide reached 41,314 yuan, with real growth and economic growth remaining in lockstep. Per capita employment income and net business income increased by 5.8% and 5.6%, respectively, in nominal terms, which were major factors in income growth. The average income of rural residents grew faster than that of urban residents, narrowing the gap between the two groups, with the per capita disposable income ratio of urban and rural residents falling from 2.39 in 2023 to 2.34 in 2024.

Efforts to meet people’s basic needs were redoubled 

Greater emphasis was placed on improving the lives of people with difficulties and in key groups, with one-off subsistence allowances given to some of the former. A tightly woven social security net has been introduced to ensure that everyone shares in the fruits of development. National per capita net transfer income increased by 5.3%, in nominal terms, in 2024, with per capita income from social assistance and income from pensions increasing by 9.8% and 7.2%, respectively. The number of people lifted out of poverty who are in work remained stable at more than 30 million for the fourth consecutive year. Investment increased to overcome shortcomings in ensuring people’s wellbeing, with investment in the production and supply of electricity and heating as well as water conservancy management up 29.7% and 41.7%, respectively, in 2024 compared with the previous year. Social security coverage was consolidated and expanded, with increases in the numbers of people enrolled in basic old-age insurance, unemployment insurance, and workers’ compensation insurance. 

Basic public services were improved further 

Focusing on people’s desire to improve their standard of living, the state endeavored to meet the demand for diverse public services at multiple levels. Greater higher education resources were provided, with 600,000 additional general high school places created and 400,000 student dormitory bed spaces added to colleges and universities in 2024. By the end of October 2024, the proportion of nursing beds in eldercare facilities had risen to 62.2% of the total, achieving the target set in the 14th Five-Year Plan ahead of schedule. By the end of June 2024, a total of 1,102 sports parks had been built, once again achieving a target for the 14th Five-Year Plan period ahead of schedule. 

In 2025, China’s economic development faces both opportunities and challenges. Unfavorable impacts resulting from changes in the external environment may intensify, and difficulties arising from our domestic transformation and upgrading activities will continue to manifest themselves, but the fundamental trend of and conditions for China’s long-term economic development remain unchanged. The timing and momentum for our development remain favorable, and many advantageous factors for achieving stable economic development still exist. Amid the crises in our external environment lie new opportunities, which can open up new horizons on the shifting landscape. Furthering reform will enable us to unleash and enhance economic vitality, and the development of new productive forces in line with local conditions will foster new growth points. Boosting domestic economic flows will ensure stable economic development, while improvements to our macroeconomic governance will allow us to better respond to difficulties. By unleashing vitality through reforms and policies, China can transform positive factors in various fields into development achievements and ensure a sustained economic recovery and growth.

(Originally appeared in Qiushi Journal, Chinese edition, No. 3, 2025)