• Key policy rate: 3.1% (February 2025)
• 2024 GDP growth rate: 5%
• Full-year GDP growth target: 5%
• Caixin Manufacturing Purchasing Managers’ Index reading: 50.8 (February 2025)
• Inflation rate: -0.7% (February 2025)  

China is currently the second-largest economy in the world and serves as the biggest manufacturing hub globally. 

The Chinese government has made progress in its shift towards domestic-driven economic growth in the 2010s. Its services sector has accounted for more than half of national output yearly since 2015, while the share of the industrial sector has declined to below 40 per cent. 

Further, China’s industrial sector accounts for at least one-fourth of global manufacturing value added – dwarfing the total share of European countries (22.7 per cent) and of Northern America (19.2 per cent). The country’s top products are electrical equipment, computer parts and products, and motor vehicles. China-made electric vehicles (EV) and batteries, which are largely funded by state-owned enterprises (SOEs), now account for 35 per cent of global EV exports, according to the 2023 Global EV Outlook Report.

By expenditure class, the share of household consumption to China’s GDP rose to 37 per cent in 2022, although far from its peak share of 72 per cent in 1962. 

Over the next five years, China’s Communist Party has committed to deepen reforms, be more open to international trade, and harness advancements in technology to achieve its goal of modernization. However, its persisting property sector crisis and hefty tariffs imposed by the US and the EU threaten the growth of Chinese exports and the overall domestic economy. The Chinese government has responded with monetary and fiscal stimulus packages worth RMB 10 trillion (USD 1.4 trillion), largely to help local governments manage debt better and make it easier for residents to acquire unsold homes. These incentives lifted Chinese equities in October, although market players have since turned cautious after US President-elect Donald Trump threatened to impose sky-high tariffs on Chinese imports as he returns to power. 

House view: Lundgreen’s continues to see China sustain its position as the world’s largest single market with its population of over 1.4 billion and a relatively high GDP per capita of USD 22,135, higher than that in other developing economies per World Bank data. This puts China in a unique position as it features facets of a developed nation while still enjoying preferential duties and lower borrowing rates from global development institutions.  

Its huge consumer market with great purchasing power, coupled with abundant government subsidies through SOEs, will provide support in China’s economic resurgence and sustain its buoyant manufacturing sector. These point to a sustained growth in China in the years to come. 

Updated as of 21 March 2025