BEIJING (Reuters) -China’s economy ended 2024 on better footing than expected helped by a flurry of stimulus measures, although the threat of a new trade war with the United States and weak domestic demand could hurt confidence in a broader recovery this year.

For the full-year 2024, the world’s second-largest economy grew 5.0%, meeting the government’s annual growth target of around 5%. Analysts had forecast 4.9% growth.

The economy grew 5.4% in the fourth quarter from a year earlier, significantly beating analysts’ expectations and marking the quickest since the second quarter of 2023.

KEY POINTS

* 2024 GDP +5.0% (versus target of around 5%)

* Q4 GDP +5.4% y/y (f’cast +5.0%, Q3 +4.6%)

* Q4 GDP +1.6% q/q s/adj (f’cast 1.6%, Q3 +1.3% revised)

* Dec industrial output +6.2% y/y (f’cast +5.4%, Nov +5.4%)

* Dec retail sales +3.7% y/y (f’cast +3.5%, Nov +3.0%)

* 2024 fixed asset investment +3.2% (f’cast +3.3%, Jan-Nov +3.3%)

* 2024 property investment -10.6% (Jan-Nov -10.4%)

* Fears of more U.S. trade tariffs clouding 2025 outlook

MARKET REACTION:

China’s main Shanghai stock market was up 0.3%, while the blue-chip CSI 300 index was 0.4% higher after the data release. The yuan was little changed against the dollar.

COMMENTARY:

ELLIOT CLARKE, SENIOR ECONOMIST, WESTPAC, SYDNEY

“Overall, these are outcomes as expected, and what’s driving them is expected as well that external sector. And really to make sure they’re in a strong position to weather the uncertainty around U.S. tariffs, and to make sure consumers don’t get stuck, they need to do more with policy through February and March when we get the congress meeting.

“They will cut interest rates a bit further this year and cut triple R to support liquidity. So that all continues, but really the driving force for the growth outlook has to be the fiscal side.

“They can achieve close to 5% growth in 2025. That’s on the assumption that they do take that active stance with policy and it’s on the assumption as we have seen with trade this year they have got themselves into a good position in terms of avoiding U.S. tariffs.”

GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG

“The underlying headwind is fiercer than the headline GDP number suggests. With strong net export growth and more supportive stimulus, some positive momentum has been brewing in the economy towards stabilisation.

“However, domestic demand has remained weak without a rebound in industrial production and retail sales, especially as the property sector still drags investment. If China wants to achieve a growth rate above 4.5% in 2025, it will need sharper interest rate cuts and more demand-side fiscal policies.”

LYNN SONG, CHIEF ECONOMIST FOR GREATER CHINA, ING, BASED IN HONG KONG

“After reaching the growth target in 2024, the key question for 2025 is where policymakers will set the growth target at the upcoming Two Sessions in March. Our baseline scenario has policymakers electing to set a target of “around 5%” again or at the least “above 4.5%’. 

“Setting of such a target despite likely headwinds from tariffs and sanctions would imply that we will see stronger fiscal policy support as well as continued monetary policy easing and would likely be seen by markets as a signal of confidence.”

ALEX LOO, FX AND MACRO STRATEGIST, TD SECURITIES, SINGAPORE

“We don’t reckon the economy is on a strong footing despite the recent stimulus bump, and more fiscal funds are likely to be deployed at the Budget on March 5 to cushion China’s economy against the Trump (administration’s) policies. 

“Focus turns to Trump’s actions on China next week and a 60% tariff on China may prompt the PBOC to cut the 7-day reverse repo next week to boost activity through monetary easing.

“For 2025, we expect China’s GDP growth at 4.8%, as an around 5% target is likely to be unveiled at the Budget judging by the local government GDP targets.”

ANDY JI, ASIAN FX & RATES ANALYST, ITC (NS:ITC) MARKETS, SHANGHAI

“It is largely a mixed bag of economic data today to end 2024, with some data discrepancy and clearly carrying lacklustre momentum into 2025. In particular, the full-year pace of retail sales and investment growth, at 3.5% and 3.2%, respectively, remained significantly below the overall headline GDP growth of 5%.

“With U.S. trade policy change looming, this year’s growth target will be closely watched again in March, although too little attention was paid to the big miss in 2024 inflation target of ‘about 3%’, on the back of weak consumer spending.”

BEN BENNETT, ASIA-PACIFIC INVESTMENT STRATEGIST, LEGAL AND GENERAL INVESTMENT MANAGEMENT, HONG KONG

“The data is an endorsement of the economic shift that authorities have implemented. The property sector is still under pressure and authorities don’t want to see a return to the old days of leverage and big price rises, so investors still need to be patient.”

ZHIWEI ZHANG, CHIEF ECONOMIST, PINPOINT ASSET MANAGEMENT, HONG KONG

“The batch of macro data shows mixed messages. While the GDP growth surprised on the upside in Q4, the unemployment rate rose above 5%. I think the shift of policy stance last September helped the economy stabilise in Q4, but it requires large and persistent policy stimulus to boost economic momentum and sustain the recovery. To curb the rise in unemployment rate, fiscal policy must take a more proactive stance.”

ZHAOPENG XING, SENIOR CHINA STRATEGIST, ANZ, SHANGHAI

“GDP surprises the market at 5.4% y/y high on a low base as well as policy stimulus. IP is strong due to external frontloading demand, while retail sales normalise to annual average levels.

“The strong numbers pave the way to about 5% 2025 growth target and offer a chance for China to review the risk side in the economy. Recent liquidity tightness and Vanke saga both suggest macro prudential now carry more weight than growth in the policy agenda ahead of U.S. tariffs. We expect the PBoC to ease immediately against the possible tariff shock. Near-term RRR cut before LNY remains possible, but rate cut may delay.”

WOEI CHEN HO, UOB, ECONOMIST, SINGAPORE

“It’s mainly driven by the industrial sector in December. Part of this would be to do with front-loading of production and exports before (U.S. President-elect Donald) Trump comes back to office.

“That may not be sustained going forward, so the outlook for this year is still going to be weak. Retail sales is one of the most important things we should be watching now because it is a reflection of the consumer sentiment, which I think is still rather soft at this point.”

CHARU CHANANA, CHIEF INVESTMENT STRATEGIST, SAXO, SINGAPORE

“That’s a sigh of relief for Chinese assets, it signals that the stimulus measures of 2024 are having an impact. China markets still face structural headwinds as well as tariffs risks, and the response to those will be the ultimate driver of long-term returns. The beat is quite strong on industrial production – perhaps that’s because of the export front-loading to the U.S. before the new administration’s tariffs kick in. Property still weak, retail sales comes more from the stimulus impact.

“Positive signals, but we will need to see how stimulus and tariff risks develop from here for the momentum to sustain.”

BACKGROUND

* China’s economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, weak demand and high local government debt levels weighing heavily on activity.

* Policymakers have unveiled a blitz of stimulus measures since last September to revive sputtering growth, and have pledged to do more this year as U.S. President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.

* Analysts say the scope and size of China’s moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.

* China is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.

* The world’s second-largest economy is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026 amid U.S. tariff pressures, a Reuters poll showed.

BEIJING (Reuters) – China’s economy grew 5.4% in the fourth quarter from a year earlier, official data showed on Friday, significantly beating analysts’ expectations and enabling the government to meet its annual growth target.

Analysts polled by Reuters had forecast fourth-quarter gross domestic product (GDP) would expand 5.0% from a year earlier, quickening from the third-quarter’s 4.6% pace as a flurry of support measures began to kick in. The quarter’s growth marked the quickest since the second quarter of 2023.

For the full-year 2024, the world’s second-largest economy grew 5.0%, data from the National Bureau of Statistics data showed, meeting the government’s annual growth target of around 5%. Analysts had forecast 4.9% growth.

On a quarterly basis, GDP grew 1.6% in October-December, compared with a forecast 1.6% increase and a revised 1.3% gain in the previous quarter.

Chinese policymakers have unveiled a blitz of stimulus measures since September last year to revive sputtering growth, and have pledged to do more this year as U.S. President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.

By Ankur Banerjee

SINGAPORE (Reuters) – The yen was poised for its strongest weekly performance in over a month as expectations grow that the Bank of Japan will raise rates next week, putting the dollar on the back foot ahead of Donald Trump’s return to the White House.

Remarks from senior BOJ officials along with Japanese data that points to persistent price pressure and strong wage growth have helped boost market confidence that a rate shift is in the offing with traders pricing in an 80% chance of a hike next week.

The yen has climbed 1.5% against the dollar this week, its strongest weekly run since late November. It was last a tad weaker at 155.34 per dollar on Friday but still close to the one-month high of 155.10 it touched on Thursday.

“Inflation and wage data does suggest that the BOJ could hike rates further, and commentary is also signalling one,” said Charu Chanana, chief investment strategist at Saxo.

“However, yen strength could be fleeting especially if (BOJ Governor Kazuo) Ueda surprises again with a dovish commentary despite a rate hike.”

The euro was steady at $1.03035 and sterling was little changed at $1.22355 in early trading. That left the dollar index, which measures the U.S. currency against six other units, at 108.94, inching away from a high of more than two years touched at the start of the week.

The index is set for a 0.6% drop in the week, which would snap a six-week winning streak, after traders started pricing in the prospect of two rate cuts this year in the wake of an easing U.S. core inflation data on Wednesday. The Federal Reserve last month projected two rates in 2025.

But data on Thursday showed U.S. retail sales increased in December, pointing to strong consumer demand and lending strength to the view that the Fed should be cautious in its approach to cutting rates this year.

Fed Governor Christopher Waller said on Thursday three or four rate cuts are still possible if economic data weakens further.

Markets are currently pricing in 41 basis points of cuts from the Fed this year, according to LSEG data – up from 37 basis points before Waller’s comments.

The benchmark Treasury 10-year yield was at 4.612% in Asian hours. It as dropped over 16 basis points this week, its weakest weekly performance in over a month.

China’s economy is also set to be a focus for markets on Friday, with gross domestic product (GDP) data set to be released. A Reuters poll predicts GDP grew 5.0% in October-December from a year earlier, quickening from the 4.6% pace in the third quarter.

China’s yuan has been hovering near 16-month lows in recent weeks as investors brace for U.S. tariffs and contend with record low local yields and slow economic recovery. The offshore yuan traded at 7.3456 per dollar.

Investors are also awaiting Trump’s inauguration speech on Monday to get a better sense of his policy steps. Policies on tariffs and taxes that he has outlined so far are expected to boost growth but also be inflationary.

By Katie Paul

NEW YORK – Advertisers reliant on TikTok as a major digital marketing tool rushed to prepare contingency plans this week, as the realization dawned on many that the popular Chinese-owned social media app may not be saved before a U.S. ban takes effect on Sunday.

One marketing executive described it as a “hair on fire” moment for the ad world, after months of conventional wisdom saying that a solution would materialize to keep the short-video app up and running.

“It seemed unbelievable even as of just a few weeks ago to imagine that there would be no TikTok,” said Kerry Perse, the founder of marketing firm Influence & Inspire Consulting and former head of social media at Omnicom Group (NYSE:OMC)’s media agency OMD.

“We all thought that any access issues to the TikTok app would be slow and drawn-out,” she said. 

Chinese tech firm ByteDance is facing a Jan. 19 deadline to sell TikTok’s U.S. assets or accept an unprecedented ban of the app, used by 170 million Americans, on national security grounds.

TikTok plans to shut U.S. operations of the app on Sunday barring a last-minute reprieve, Reuters reported on Wednesday.

U.S. President-elect Donald Trump’s incoming national security adviser said the new administration plans to put measures in place “to keep TikTok from going dark,” but it was not immediately clear whether Trump – who takes office on Monday – could legally do so.

“I think after a long time feeling like this was a ‘boy who cried wolf’ situation, we may actually have a wolf sighting,” said Craig Atkinson, CEO of digital marketing agency Code3.

If a ban does occur, more than $11 billion in annual U.S. ad investment would be up for grabs, according to a forecast from marketing group WARC Media.

Most of that spending is likely to shift to platforms where advertisers are already established and running short-video ad campaigns, primarily Meta’s Instagram and Alphabet (NASDAQ:GOOGL)’s YouTube Shorts, four ad agency sources told Reuters.

TikTok staffers appeared to be in the dark about what exactly would happen to the app as of Sunday, the sources said, although two of the sources noted that TikTok was offering favorable refund terms in the event services stop in the middle of advertisers’ campaigns. TikTok did not immediately respond to a request for comment.

Even as the ban approached, the company continued to pitch advertisers on new features, like a tool launching in test form on Thursday that would make it easier to create, modify and add advertisements in bulk, according to an email from this week described to Reuters.

It also planned to host a booth at the upcoming World Economic Forum meeting of political and business leaders in Davos,  Switzerland, next week, after holding cocktail parties at the Consumer Electronics Show in Las Vegas earlier this month.

Meanwhile, brands and content creators alike were downloading their data en masse in case the app becomes inaccessible as of Sunday, hoping to salvage at least some of the fruits of their labor.

One influencer, who hawks cereal and beauty products in her videos, posted on Tuesday advising her nearly 16,000 followers on how to save their videos.

“Here’s how to download your TikTok data so you don’t lose literally everything you’ve had from the past five years,” said Maria Slate, grimacing, as the words “it’s fine I’m fine” displayed over her head.

The sentiment was a marked change from the dominant mood last month, when advertisers told Reuters they were in no rush to shift their marketing budgets off TikTok despite a U.S. appeals court upholding the law requiring a divestment or ban.

As of Jan. 8, ad spending on TikTok was set to increase 57% in the first two months of 2025, according to Guideline.ai, a research firm that tracks forward booking data from major ad agencies.

TikTok has become a powerful tool for advertisers looking to reach young Americans in particular in recent years, growing to 20% of U.S. social media ad spending from only 2% in 2020, its first full year of operation in the United States, Guideline.ai said.

Part of that power has come from the platform’s cultivation of influencers and online shopping culture, which has made it a reliable driver of e-commerce sales.

E-Marketer, another research firm, forecast late last year that some 43.8% of U.S. TikTok users would have made a purchase on the platform by the end of 2024, a higher share than on Meta-owned services Facebook (NASDAQ:META) and Instagram.

NEW YORK (Reuters) – The United States should keep oversight of potential problems in the U.S. bond market, President-elect Donald Trump’s Treasury Secretary pick Scott Bessent told Congress on Thursday, referring to Wall Street billionaire Howard Lutnick’s plan to clear Treasury futures through a UK firm.

Lutnick’s BGC Group brokerage last year launched a futures exchange and plans to add U.S. Treasury futures in the first quarter this year.

That FMX Futures Exchange has partnered with London Stock Exchange Group (LON:LSEG)’s London Clearing House (LCH), stoking concerns among some U.S. lawmakers that the United States could lose control and oversight of certain Treasury market trades.

With a value of around $28 trillion, the U.S. Treasury market is the world’s biggest bond market and is crucial to the U.S. government’s ability to finance itself, as well as for global financial stability.

During Bessent’s Thursday confirmation hearing, Senator John Cornyn asked him if “a proposal for an entity to clear U.S. Treasury futures at the London Clearing House” could have financial stability repercussions, alluding to FMX.

“Some argue that the Bank of England would have control over a, heaven forbid, a default scenario … in this critical market, instead of the U.S.,” he said.

Bessent said resolution authority over the U.S. Treasury market should remain in the country.

“It is important for the U.S., for U.S. Treasuries, for us to be able to resolve any stress issues in the market in the U.S.,” he said, adding he planned to investigate the issue.

Bessent noted that the bankruptcy of Lehman Brothers in 2008, which caused global markets to plummet, was triggered by issues with its UK subsidiary.

Lutnick is a Trump backer who lost out on the Treasury Secretary role to Bessent but was instead picked to lead Trump’s trade and tariff strategy as head of the Commerce Department.

An FMX spokesperson said the FMX Futures Exchange is fully approved by the Commodity Futures Trading Commission (CFTC), the U.S. derivatives regulator, to list U.S. Treasury futures contracts.

LCH is registered with the CFTC to clear futures contracts, a spokesperson at the London-headquartered company said.

“LCH holds all futures customer collateral in the U.S. onshore, as required by the CFTC for the protection of such funds and assets belonging to U.S. firms,” the spokesperson added in an emailed statement.

BEIJING (Reuters) – China’s new homes prices were flat month-on-month in December, official data showed on Friday, after the government rolled out multiple rounds of stimulus measures to lift the property sector from a prolonged slump.

New home prices were steady in December for the first time since June 2023, compared with a 0.1% dip in November, according to Reuters calculations based on National Bureau of Statistics data.

In annual terms, new home prices fell 5.3% after a 5.7% drop the previous month.

Home sales have fallen sharply in China since the property market was hit by a crisis in 2021. Debt-laden property developers have been struggling to repay their borrowings and deliver pre-sold homes, dampening confidence in the sector.

Beijing rolled out a slew of measures in the second half of last year to stabilise the real estate market, including cutting mortgage rates and allowing local governments to buy unsold housing units and idle land with special bond proceeds.

Risks in China’s real estate market have been significantly mitigated, the country’s central bank governor said on Monday.

(Reuters) – Scott Bessent, U.S. President-elect Donald Trump’s choice to head the Treasury Department, on Thursday said the question of eliminating the U.S. debt limit is “nuanced,” but said if Trump wants to do so he will work with him and with Congress to get it done.

“The debt limit is a very nuanced convention,” Bessent told the U.S. Senate Finance Committee in response to a question from U.S. Senator Elizabeth Warren about whether he would support its repeal. “Look, the United States is not going to default on its debt if I’m confirmed. But I will tell you that, for people who don’t understand the debt limit, it might be like taking out your handbrake in your car, that you can still hit the brakes, but it’s one less feature.”

By Kanishka Singh

WASHINGTON (Reuters) – The U.S. Securities and Exchange Commission on Thursday settled charges against hedge fund Two Sigma over failure to address known vulnerabilities in its investment models, the regulatory agency said.

Two Sigma voluntarily repaid $165 million to impacted funds and accounts during the SEC’s investigation and agreed to pay $90 million in civil penalties to settle the SEC’s charges, the agency said in a statement.

The SEC said that in or before March 2019, Two Sigma employees identified and recognized vulnerabilities in certain Two Sigma investment models that could negatively impact clients’ investment returns, but the hedge fund waited until August 2023 to address the issues.

Despite recognizing these vulnerabilities, Two Sigma failed to adopt and implement written policies and procedures to address them and failed to supervise one of its employees who made unauthorized changes to more than a dozen models, which resulted in Two Sigma making investment decisions that it otherwise would not have made on behalf of its clients, the SEC added.

“After proactively reporting the issue in 2023 and promptly remediating negatively impacted clients, Two Sigma is pleased to have reached a resolution with the SEC, putting this matter behind us,” a spokesperson of the hedge fund said.

“We are committed to acting with the utmost integrity and have made a range of enhancements to our operational policies, procedures, and oversight,” the hedge fund, which has $60 billion in assets under management, added.

By Kevin Yao

BEIJING (Reuters) – China’s economy likely rebounded in the fourth quarter as several rounds of policy stimulus kicked in, enabling the government to largely meet its 2024 growth target, though the risk of new U.S. tariffs could hold back a broader recovery.

A Reuters poll predicts gross domestic product (GDP) grew 5.0% in October-December from a year earlier, quickening from the 4.6% pace in the third quarter.

Full-year economic expansion was expected to come in at 4.9%, largely meeting the official target of around 5%, the poll found. The economy grew 5.2% in 2023.

Larry Hu, chief China economist at Macquarie, said Beijing’s policy pivot in September underscored its resolve to defend the growth target. Beijing has rarely missed its growth targets in the past.

“Thanks to this, GDP growth in the fourth-quarter may rebound above 5% year-on-year, so that full-year GDP growth could reach the target of around 5%,” Hu said in a note.

“If 2025 GDP target is set at around 5% again, how much policymakers will do to stimulate the weak track (consumption/property) will depend on the impact from tariffs on the strong track (exports/manufacturing).”

On a quarterly basis, the economy is forecast to grow 1.6% in the fourth quarter, versus the 0.9% pace in July-September.

Policymakers have rolled out a blitz of stimulus measures since September, including interest rate cuts, cash injections and steps to tackle hidden debt of local governments. They have also expanded a trade-in scheme for consumer goods such as appliances and autos, helping to revive retail sales.

The world’s second-biggest economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, mounting local debt and weak consumer demand weighing heavily on activity.

Exports, one of the few bright spots, could lose steam as President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.

But even as strong exports propelled the country’s trade surplus to a record high of $992 billion last year, the yuan currency has come under selling pressure. A dominant dollar, sliding Chinese bond yields and the threat of higher trade barriers have pushed the yuan to 16-month lows.

TOUGH BATTLE AHEAD

At an agenda-setting meeting in December, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth in 2025.

Leaders have agreed to maintain an annual growth target of around 5% for this year, backed by a record high budget deficit ratio of 4% and 3 trillion yuan ($409.2 billion) in special treasury bonds, Reuters has reported, citing sources.

Such a target could be more ambitious than last year given the economy’s slowing trajectory and increased external headwinds.

China’s economic growth is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026, according to the poll.

The government is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.

China’s central bank is expected to deploy its most aggressive monetary tactics in a decade this year as it tries to revive the economy, but in doing so it risks quickly exhausting its firepower.

Separate data on December activity, to be released alongside GDP data, is expected to show consumption picked up while factory output growth steadied.

Retail sales, a key gauge of consumption, are forecast to grow 3.5% in December from a year earlier, versus a 3.0% rise in November. Factory output is seen growing 5.4% in December year-on-year, matching November’s rise.

($1 = 7.3315 Chinese yuan)

SAO PAULO (Reuters) – The final version of the Brazilian tax reform sanctioned on Thursday by Brazil President Luiz Inacio Lula da Silva is slightly higher than the one approved by the lower house before it went to the senate, special secretary for tax reform Bernard Appy said.

The final tax rate keeps the essence of the text approved by congress, he said, adding that all vetoes were justified by technical adjustment or a constitutionality question.

Estimates from the Ministry of Finance indicate that the standard rate of the new consumption tax will be around 28%, he added.