China’s president, Xi Jinping, has officially announced that the country has already hit its 5% GDP growth target for 2024.

Speaking at a high-profile New Year’s event hosted by the nation’s top political advisory body, Xi declared the economy “stable and progressing,” emphasizing that employment remained steady and inflation was under control.

This comes as policymakers in Beijing have been rolling out aggressive measures since September to keep the economy on course. Economists had pegged the growth rate at 4.8%.

Manufacturing drives recovery, but consumers hold back

China’s industrial output proved to be a bright spot in November, surging 5.4% year-on-year. The country’s high-tech manufacturing sector took the lead, posting an impressive 9.1% growth in the third quarter.

But while factories are humming, consumer spending tells a different story. Retail sales hit RMB 4.38 trillion (about $608.82 billion) in November, reflecting only a 3% increase. This slowdown shows the ongoing caution among Chinese consumers who are tightening their wallets amid economic uncertainties.

Weak domestic demand remains a major drag on the economy, with muted consumer confidence and sluggish recovery in household spending. On the investment side, fixed asset investment grew by 3.3% between January and November.

Sectors outside the troubled real estate market posted stronger growth, with investments up by 7.7%. Still, these gains haven’t been enough to fully counterbalance the fallout from the country’s persistent property market woes. The real estate sector, long a pillar of China’s economic engine, remains stuck in a prolonged slump despite government intervention.

Inflation flirts with deflation

China’s inflation barely moved in November, with the Consumer Price Index (CPI) creeping up just 0.2%. People are now worried about deflation, and it’s not helping that producer prices keep dropping. That’s slashing company profits and putting the brakes on the economy.

Overall unemployment in China is holding steady at 5.1%, which sounds okay, but youth unemployment is still a disaster. It’s killing people’s confidence and making them spend less.

And then there’s the property market. No matter how much help the government throws at it, it’s still a total disaster and dragging the economy down even more.

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