China's GDP grew by 5% in 2024, achieving its annual target, with a fourth-quarter rebound to 5.4% driven by late-September stimulus measures. The full-year growth trajectory followed a "V-shaped" recovery. Provincial targets (5%-6%) suggest a 2025 GDP growth goal of around 5%, though international institutions project 4%-4.5% due to external challenges and sluggish domestic demand.
Despite GDP expansion, China's crude oil throughput fell by 3% in 2024 due to accelerated fuel substitution, weak chemical demand, and high oil prices squeezing refining margins.
Gasoline and diesel consumption dropped by 1.9% and 6.9% YoY, respectively in 2024. Gasoline demand was hit by the rapid adoption of electric vehicles (EVs), with the share of EVs in new passenger vehicle retail sales rising 12 percentage points to 47.6% and electricity consumption in the tertiary sector up 9.9%. Diesel demand was eroded by LNG substitution, as falling natural gas prices spurred a 46.3% YoY surge in LNG-powered heavy-duty truck (HDT) mileage, while diesel HDT mileage fell 6.45%.
Three Driving Forces and Three Constrains on Economic Growth:
Driving Forces: Record-high exports, growth in manufacturing investment, and increased central government infrastructure spending.
Constrains: Weak consumer spending, declining local infrastructure investment, and a sluggish real estate market.
Record-High Exports: China's total export value surpassed 25 trillion yuan, hitting a record high and up 7.1% YoY. Net exports of goods and services contributed 30.3% to GDP growth, a 41.7 percentage point surge from 2023, driven by global manufacturing demand recovery and an "export rush" on anticipation of higher export tariffs in 2025. Manufacturing exports accounted for 98.9% of the total export value, supporting demand for upstream chemical and metal raw materials, as well as energy consumption. Reflecting this trend, production of ethylene - a key chemical feedstock - edged up 0.7% YoY in 2024, while electricity consumption in the secondary sector grew by 5.1%. Looking ahead, export growth in 2025 is expected to follow a "high-then-low" pattern, with U.S. tariff hikes likely dampening performance in the second half of the year.
Manufacturing Investment: A 9.2% YoY increase was recorded in 2024, fueled by equipment renewals and export growth. Energy conservation, carbon emissions reduction, and digital transformation were key themes, boosting green energy demand despite lower direct energy consumption. The trading volume of green electricity certificate (GEC) jumped up 4.19 times YoY, with corporate buyers representing over 99% of transactions.
Central-Led Infrastructure Investment: Grew 4.4%, led by water conservancy (41.7%) and railway construction (13.5%), supporting diesel demand.
Weak Consumption: Final consumption expenditure's contribution to GDP growth declined to 44.5%, down 38 percentage points from 2023. A 150 billion yuan trade-in subsidy drove related product sales to over 1.3 trillion yuan, contributing 79% to the total retail sales growth (3.5%).
EV Sales Surge: EV retail penetration exceeded 50% for five consecutive months (July-November 2024), reaching 47.6% for the whole year. EV ownership penetration rose to 8.9%, up 2.8 percentage points from 2023, further denting gasoline demand. The expanded vehicle trade-in scheme in 2025 is expected to further boost EV sales, potentially intensifying pressure on gasoline demand.
Despite robust EV sales, the total value of auto retail sales decreased 0.5%, as consumer incentives and automaker promotions weighed on auto prices, subsequently affecting the prices of upstream raw materials such as PVC and hot-rolled coils.
Local Infrastructure Investment Declines: Public facility management and road transport investment by local governments fell 3.1% and 1.1%, respectively, due to fiscal constraints.
China's infrastructure investment growth is expected to accelerate in 2025, driven by debt swaps and fiscal policy support, particularly in major economic provinces and strategic regions in central and western China (e.g. Sichuan). The advanced 2025 fund allocations in December 2024 boosted full-year infrastructure investment growth by 0.2 percentage points compared to the first 11 months, making it the only sector (vs. manufacturing and real estate) to see accelerating YoY growth. Meanwhile, heavy-duty truck (HDT) operating mileage index rose 10% YoY in December 2024, driven by a 56.6% surge in LNG-powered HDTs mileage, far outpacing diesel HDTs' 1.1% increase.
Property Investment Slump Deepens: China's real estate investment dropped by 10.6% YoY in 2024, but stimulus measures helped stabilize certain indicators in the fourth quarter, signaling a potential recovery in 2025 as housing inventory is absorbed and policy support continues. This stabilization is likely to spur demand in related sectors such as home furnishings and building materials.
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective. To get detailed full text, send an email to glconsulting@mysteel.com