China Economic Update Report
Quarter 2, 2024
In this issue:
China's Q2 GDP growth slows to 4.7%, missing 5.1% market expectations
In the first half of 2024, GDP grew by 5.0% year-on-year. In the second quarter, China's GDP growth slowed to 4.7% year-on-year, with a quarter-on-quarter increase of 0.7% compared to the first quarter of 2024.
In the second quarter of 2024, China’s gross domestic product (GDP) growth slowed to 4.7% year-on-year, with a quarter-on-quarter increase of 0.7%. The slowdown in GDP growth, which fell short of the market’s earlier expectations of 5.1%, was attributed to several factors, including short-term issues such as extreme weather, frequent flooding, and insufficient effective demand. The economic landscape in the second quarter highlighted a strong supply side coupled with weak demand, with external demand outpacing domestic demand.
According to quarterly economic data released by the National Bureau of Statistics, key sectors in industry and services continued to drive China’s economic growth. In the second quarter of 2024, the information transmission, software, and information technology services sector saw a remarkable growth rate of 10.2%. The manufacturing sector grew by 6.2%, while the real estate sector remained sluggish with a contraction of 4.6%.
From January to June 2024, fixed asset investment grew by 3.9% year-on-year, a decrease of 0.1% from January to May and a drop of 0.6% from the first quarter. A significant drag on investment growth has been the continued decline in real estate development investment, which fell by 10.1%. The persistently weak real estate market is one of the main factors behind this decline. In addition, shrinking external demand and declining corporate profits have dampened private sector investment enthusiasm.
On the demand side, the growth rate of consumer spending in the second quarter showed a noticeable slowdown compared to the first quarter. From January to June, the total retail sales of consumer goods increased by 3.7% year-on-year, down 0.4% from January to May and 1.0% from the first quarter. Concerns such as unemployment and income instability, asset depreciation, increasing debt, and the growing burden of supporting family members have all impacted consumer confidence and spending. Boosting domestic demand remains a key objective for economic growth in the second half of the year.
Imports and exports exceeded 21 trillion RMB for the first time in any first half-year period on record
In the second quarter of 2024, imports and exports increased by 7.4% year-on-year, up by 2.5% compared to the first quarter and 5.7% compared to the fourth quarter of 2023.
According to data from the General Administration of Customs, China’s goods trade value reached 21.17 trillion RMB from January to June 2024, marking a 6.1% year-on-year increase. Exports totaled 12.1 trillion RMB, up 6.9%, while imports reached 9.04 trillion RMB, growing by 5.2%.
Mechanical and electrical products dominated the export sector, accounting for 58.9% of total exports. Exports of automatic data processing equipment and components rose 10.3% to 683.8 billion RMB, integrated circuits increased by 25.6% to 542.7 billion RMB, and automobiles grew 22.2% to 391.8 billion RMB. Additionally, ship exports saw a notable year-on-year increase of 85.2% in USD terms, driven by cyclical orders and deliveries.
On the import side, strong growth in infrastructure and manufacturing investment led to increased imports of major bulk commodities. Iron ore imports rose by 6.2% to 611 million tons, coal imports surged 12.5% to 250 million tons, and natural gas imports climbed 14.3% to 64.7 million tons.
The robust growth in trade with ASEAN, coupled with sustained expansion with the U.S. and South Korea, indicates China’s strategic emphasis on deepening regional economic integration while safeguarding key relationships with global powers. Moving forward, it can expected that China to focus on enhancing supply chain resilience within the ASEAN bloc, leveraging trade agreements such as the Regional Comprehensive Economic Partnership (RCEP) to further reduce trade barriers. Simultaneously, China’s continued engagement with the U.S. and South Korea suggests that future trade policies may prioritize technological cooperation and managed competition, aiming to mitigate geopolitical risks while securing long-term economic growth.”
“China Travel” stands out with a 129.9% surge in overseas tourists
Recently, 'China Travel' has rapidly gained popularity worldwide, attracting many international tourists to explore this ancient yet vibrant country.
According to the latest statistics from the National Immigration Administration, the number of foreign visitors entering China through various ports reached 17.3 million in the first seven months of 2024, marking a 129.9% year-on-year increase and highlighting the strong recovery of China’s inbound tourism. This surge reflects the strong recovery of China’s inbound tourism, driven by a series of strategic policies aimed at facilitating foreign travel. Notably, the 144-hour visa-free transit policy, regional visa exemptions, and streamlined port visa applications have significantly enhanced the convenience and appeal of visiting China. Popular destinations among tourists include major cities like Beijing and Shanghai, as well as culturally rich regions such as Xi’an and Guilin. These policies not only bolster inbound tourism but also align with China’s broader economic strategy to promote high-quality development and expand its global influence.
This growth is largely attributed to a series of policies China has introduced to facilitate foreign visitors. Particularly, the implementation and expansion of the 144-hour visa-free transit policy has become a ‘flow code’ for foreign tourists to easily visit China. Currently, this policy covers 37 ports and 54 countries, greatly enhancing the convenience and attractiveness of inbound travel. Additionally, regional visa-free policies and innovative port visa policies provide more diverse options and more convenient entry methods for foreign visitors.
The surge in foreign tourists has not only fueled the prosperity of the tourism i Looking ahead, China aims to further capitalize on this momentum by enhancing its tourism infrastructure and services. Recent measures, such as the expansion of visa-on-arrival programs at major ports of entry—now covering 100 ports across 73 cities—and the 24/7 entry services at Beijing for night arrivals, underscore the country’s commitment to welcoming more international visitors. With the National Immigration Administration reporting a 267.9% year-on-year increase in visa issuances in the first half of this year, China is poised to continue fostering the tourism sector as a key driver of economic growth.”
How the 2024 Paris Olympics Boosted China’s Economy
The Olympics have driven significant growth in China’s exports of sports equipment and related products. For example, from January to April, Guangzhou enterprises exported 1.6 billion RMB worth of sports goods. In Zhejiang, exports exceeded 10 billion RMB, a 24.8% increase, accounting for a quarter of the national total. Yiwu, a key export hub, saw a 45.6% rise in sports equipment exports, with continuous orders for Olympic-related items like cheer scarves and support sticks. These figures demonstrate the strong global competitiveness of Chinese sports goods.
Additionally, the Paris Olympics provided an excellent platform for Chinese brands to enhance their global presence. Through sponsorships and advertising, many Chinese brands improved their visibility and competitiveness. Brands like White Elephant Foods, BaWang Tea, and HeyTea opened pop-up stores near Olympic venues, capitalizing on the surge in international visitors. White Elephant Foods, for instance, launched a pop-up noodle shop on Saint-Martin Street, which not only attracted attention from global audiences but also hosted live events featuring Chinese sports icons like Volleyball coach Lang Ping and UFC champion Zhang Weili. BaWang Tea’s Paris pop-up tea bar drew nearly 2,000 visitors on its first day alone, half of whom were international tourists, highlighting the brand’s growing global appeal. The success of these marketing initiatives at the Olympics suggests that future trade policies might emphasize further international expansion and stronger global supply chain management, as Chinese brands continue to seek growth opportunities abroad. By leveraging high-profile events like the Olympics, these brands are building a more competitive and diversified international presence.
About this report
This report was compiled with contributions from the team of business experts in our China offices.
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