Is China Going Broke? Analyzing Its Financial Stability
Evaluate China's economic stability. This comprehensive analysis assesses its financial health and the broader dynamics shaping its national economy.
A nation “going broke” signifies a severe economic crisis where the government cannot meet its financial commitments or faces a profound economic collapse, distinct from a company’s bankruptcy. This state does not imply a literal liquidation of national assets but rather an inability to service debt, fund public services, or maintain economic stability. Analyzing a country’s financial health involves examining various economic indicators and structural elements to understand its capacity to sustain its obligations and economic functions. The following analysis provides an objective overview of China’s economic situation, focusing on key data and trends that shed light on its overall financial stability.
Macroeconomic Performance
China’s economy demonstrated stable growth in 2024, with its Gross Domestic Product (GDP) increasing by 5.0% at constant prices for the full year, reaching approximately US$13.00 trillion. The industrial sector contributed significantly, with value-added industrial output for large-scale enterprises rising by 5.8% year-on-year, accelerating from the previous year. Manufacturing played a central role, growing by 6.1%, while high-tech manufacturing and equipment manufacturing saw even higher growth rates.
Consumer spending trends indicate a gradual recovery, with total retail sales of consumer goods increasing by 3.5% year-on-year in the first seven months of 2024, reaching US$3.83 trillion. Online retail sales of physical goods increased by 8.7% year-on-year in the same period. The overall consumer price index (CPI) rose by a modest 0.2% year-on-year in 2024, with December alone seeing a 0.1% increase. Meanwhile, the producer price index (PPI) decreased by 2.2% year-on-year in 2024, with the decline narrowing to 2.3% in December.
The employment situation in China remained generally stable throughout 2024. The surveyed urban unemployment rate averaged 5.1% for the full year, a slight decrease from the previous year. This stability was supported by an increase in the number of rural migrant workers, which rose by 2.2 million to 299.73 million in 2024.
China’s foreign trade achieved a new record high in 2024, solidifying its position as the world’s largest goods trader. The total goods imports and exports reached 43.85 trillion yuan (about 6.1 trillion U.S. dollars), marking a 5% increase year-on-year. Exports grew by 7.1% and imports expanded by 2.3%. This resulted in a significant trade surplus, reaching an all-time high of US$104.8 billion in December 2024.