China said its economy grew by 5% last year, led by exports

The economic wounds of China’s property crash are evident in the country’s many street markets for construction materials. The owner of a once-crowded store that sells everything from light fixtures and doors to toilet bowls is hurting customers.

At the same time, exports to China rose sharply. Companies export cars, smartphones and many other products to foreign markets that they can no longer sell at home. Private companies invest heavily in new plants and equipment to expand production for export.

On Friday, the National Bureau of Statistics said that China’s economy grew by 5 percent last year, as rising exports and strong investment in factories and industrial equipment offset the decline in construction.

The government set a target of “about 5 percent” almost a year ago. The 2024 numbers are slightly slower than China’s growth rate of 5.2 percent in 2023, as the country recovers from nearly three years of municipal lockdowns, mass quarantines and other strict measures against the virus. infectious diseases.

The economy grew more strongly from October to December than in any other quarter of the year. Highlighted by strong auto sales, China’s economy expanded at the end of last year at a pace that, on a year-over-year basis, represents a growth rate of 6.6 percent.

Although official figures often attract skepticism, government economists insist the economy is recovering. “China’s economy is recovering well amid booms and busts,” said Yang Ping, director of economic research at the National Development and Reform Commission, an agency of the People’s Republic of China. China’s major economic planning.

The real engine of today’s economy resides in the ever-growing trade surplus, which reached almost 1 trillion dollars last year. In December, the surplus, $104.8 billion, was the largest reported by the country for a month.

China exported enough electric and plug-in hybrid cars last year to create a line across Asia and Europe from Beijing to Rome, said Lyu Daliang, director of statistics and research at the General Administration of Customs of China, during a speech on Monday. He did not mention that the automaker also exported more than double the number of gasoline-powered vehicles, whose demand in China has halved since 2017 as consumers switched to electric models.

Exports are strong in part because China’s masses can no longer afford to buy many goods made by domestic companies. Dozens of builders failed, driving away jobs and wealth. Surviving developers are struggling to complete projects and barely taking up new housing.

The middle class has lost much of its savings as the value of housing, which is the main asset of most households, has fallen. The result is weak consumer spending that is just beginning to decline. The company’s profits have been declining for the past three years.

The Chinese government has implemented several strategies in recent months to stabilize the economy. Civil servants were given promotions. Local governments were allowed to issue more bonds, to compensate for their recent decline in revenue from the sale of public land to developers.

The national government has encouraged the construction of roads and other infrastructure to try to address the loss of construction jobs among home builders. But Beijing has struggled to find local governments with enough money to fund these projects.

To revive consumer spending, the Ministry of Commerce launched a massive program called “cash for clunkers”. Together, national and local governments offer subsidies to households that trade in old gas-guzzling cars for electric vehicles and old parts for newer, more energy-efficient models.

The program got off to a slow start last spring. The first grant is one-tenth of the cost of the vehicle or replacement parts. But sales rebounded sharply in the fall after the government doubled its fiscal stimulus in August.

China’s auto sales set a world record in November, and broke that record in December, when it sold 3.1 million passenger cars. Battery-electric and plug-in hybrid-electric-electric vehicles made up half of the market.

But some of the national and provincial subsidies for car purchases expire at the end of December, giving households a strong incentive to buy before then. Carmaker officials are concerned that many of December’s sales have been pushed back to earlier this year, which could be weaker.

Some academic economists question whether the money for the clunkers program prompts households to reinvest in new cars and appliances, and forgo food and other consumption. If consumers change their spending patterns without increasing overall spending, the impact on the economy will be modest.

Government economists insist that the program increases overall spending. This month they expanded the number of eligible devices.

“Through these new policies, we can stimulate consumer demand — it’s not just a transfer,” Ms. Yang said in a presentation on Wednesday.

The government has pressured universities, banks and other institutions in mainland China and Hong Kong to ensure that their economists do not question the accuracy of government statistics. Economists who did this had their social media accounts blocked and sometimes lost their jobs and were banned from working in the financial sector.

However, questions about the true health of the economy persist. Gao Shanwen, chief economist at Chinese brokerage SDIC Securities, became the latest to cast doubt on the economy’s growth rate during a panel in Washington last month.

“My personal guess is that over the past two or three years, the actual number on average is probably about 2 percent,” he said, adding that next year, “We know, and I think the official number is going to be around 5 percent.”

Mr. Gao has since disappeared from public view. SDIC Securities did not respond to questions about Mr. Gao, and Mr. Gao could not be reached for comment. Mr. Gao’s license as an investment adviser in Hong Kong, which was active since 2012, expired at the end of December.

Hou Weitang is on the front lines of the economic downturn. mr. Hou is a wholesaler at a construction materials market in Jinan in east China’s Shandong province. He has been working in the market for 20 years. Last weekend was almost deserted.

Mr. Hou said the situation was getting worse and worse. Like many entrepreneurs, he is now focused on cutting costs rather than spending or investing.

“We must reduce costs, reduce equipment costs, participate in price wars and try to sell more,” said Mr. Hou. “All expenses are cut — that’s the only way we can keep the doors open; otherwise we will not be able to pay the expenses.”

Li You participated in the research.