China's economy: From recovery to challenge - the view 2025!

China's economy: From recovery to challenge - the view 2025!

China's economy has been deeply integrated into the global economy since 1978 and is now an indispensable part of it. The nation is described as sustainable and with great potential, characterized by an extensive market, a full industrial system and abundant human resources. Given this environment, China is pursuing long-term strategies such as dual circulation and programs such as “Made in China 2025” that target high-quality developments. These strategies should help to increase the country's ability to innovate and positively influence the course of economic developments.

China's gross domestic product (GDP) experienced consistent growth of over 6% from 2017 to 2019. Even during the COVID-19 pandemic in 2020, growth did not stagnate and was 2.2%. The recovery in 2021 was strong, with growth of 8.4%. The growth rates for 2022, 2023 and 2024 were 3%, 5.2% and 4.9%. Overall, China's GDP grew from 82.7 trillion yuan in 2017 to 134.9 trillion yuan in 2024 during this period, representing a significant economic recovery. This data was obtained from, among others Statista documented.

Structure of the economy

In 2024, the services sector is forecast to account for 56.7% of GDP, followed by industry at 36.5% and agriculture at 6.8%. Particularly high growth rates are recorded in the areas of IT and software services as well as in mechanical engineering, electronics and aerospace. China is also a leader in renewable energy production and continues to invest heavily in green technologies.

In international trade, total import and export turnover increased from 27.8 trillion yuan in 2017 to 43.8 trillion yuan in 2024. The trade surplus increased from 2.87 trillion yuan to 7.27 trillion yuan during the same period. Of particular note, exports to Belt and Road Initiative (BRI) countries account for 50.3% of total trade.

Social and economic challenges

Although China has made significant progress, there are significant challenges facing the country. This includes slow economic growth and structural problems, such as high youth unemployment of 21.3% (as of June 2023). The general unemployment rate is currently hovering around 5.1%. At the same time, the working-age population is expected to account for 60.9% of the total population by the end of 2024.

The high debt burden on municipalities and a decline in state revenue from property sales are further critical points. Foreign direct investment in China fell to about $115.56 billion in 2024, while Chinese direct investment abroad increased at $177.29 billion. The swings in the growth forecast for 2025 vary between 4.1% and 5%, with a decline to 3.8% to 4.3% expected in the long term, underscoring the uncertainties in the economic landscape.

The focus on high-tech and digital transformation is considered to be one of the future growth engines. Stimulus measures aim to promote innovation and stimulate consumption. Despite these measures, the economy continues to face internal and external challenges, but has undeniably high growth potential that needs to be exploited.