The unbalanced growth raises concerns structural problems could 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 (US time) 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 per cent in 2024, 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 2025'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 2025 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."
China faces a US tariff hike when Donald Trump is inaugurated as president. (AP PHOTO)
Chinese exporters expect higher tariffs to have a much greater impact than during Trump's first term, accelerating a re-shoring of production abroad and further shrinking profits, hurting jobs and private sector investment.
A trade war 2.0 would find China in a much more vulnerable position than when Trump first raised tariffs in 2018, as it still grapples with a deep property crisis and huge local government debt, among other imbalances.
Beijing has pledged to prioritise domestic consumption in 2025 policies, but has revealed little apart from a recently-expanded trade-in program that subsidises purchases of cars, appliances and other goods.
China gave civil servants their first big pay bump in a decade, although the higher estimates measure the overall increase at roughly 0.1 per cent of GDP.
Financial regulators received steep wage cuts, as many others in the private sector did.
The world's second-largest economy beat economists' 2024 forecast of 4.9 per cent growth.
Its fourth-quarter 5.4 per cent pace was the quickest since early 2023.
"China's economy is showing signs of revival, led by industrial output and exports," said Frederic Neumann, chief Asia economist at HSBC.
But the last-minute bounce in growth might already have been flattered by front-loading of shipments to the US, which will inevitably lead to a pay-back.
"As exports come under pressure in 2025, dragged lower by US import restrictions, there will be an even bigger need to apply domestic stimulus," Neumann said.
China and Hong Kong shares drew some support from the data, but the yuan lingered about 16-month lows, under pressure from sliding Chinese bond yields and the tariff threat.
The quiet market reaction reflects wavering confidence in China's outlook, analysts said.
Long-standing scepticism about the accuracy of official data has also shifted into higher gear in the past month.
A bearish commentary by Gao Shanwen, a prominent Chinese economist who spoke of "dispirited youth" and estimated that GDP growth might have been overstated by 10 percentage points between 2021 and 2023, vanished from social media after going viral.
Beijing has rarely missed its growth targets in the past.
The last time was in 2022 when the COVID-19 pandemic knocked growth to 3.0 per cent.
