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China’s economy grew five per cent 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 imbalance raises concerns that structural problems may deepen in 2025, when China plans a similar growth performance by going deeper into debt to counter the impact of expected US tariff hikes, potentially as soon as Monday when Donald Trump is inaugurated as president.
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.
Export-led growth has been partly underpinned by factory gate deflation which makes Chinese goods more competitive on global markets, but also exposes Beijing to greater conflicts as trade gaps with other countries widen. Within borders, falling prices have ripped into corporate profits and workers’ incomes.
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