“Overall, the recovery is tentatively sustained in a still-fragile mode.”

So said SocGen’s Wei Yao and Michelle Lam on Friday, voicing what I’ll euphemistically call apprehension about the Chinese economy which, according to unflinching apparatchiks in Beijing, met Xi Jinping’s growth goal in 2024.

Full-year growth was exactly 5% last year, the NBS claimed, crediting an especially robust final three months. In Q4, exports and stimulus together drove the briskest sequential growth in nearly two years.

The Q4 YoY pace, 5.4%, was the best result in six quarters. According to some rough estimates, around half the late-year boost was stimulus-driven and around half was attributable to front-loading on the part of China’s trade partners, who’re anxious to get what they need from “the world’s factory” before “Tariff Man” returns to the Oval Office.

There was no suspense around Friday’s GDP release. Xi indicated late last month that the full-year target was met. If Xi says growth was 5%, well then growth was 5%. Ask Gao Shanwen — if you can find him — what happens to people who suggest otherwise. (Gao, chief economist at a state-run brokerage, was disciplined and “vanished” from local social media after speculating that the Chinese economy might be growing at less than half the officially-declared pace. What would possess a senior-level employee at an SOE to go out on such a dangerous limb is beyond me. Gao’s lucky to be alive.)

As discussed in “The Chilly Truth Behind China’s 5% Growth,” there’s tension in the juxtaposition between Chinese officials’ deflation denials and Chinese statisticians’ penchant for leaning on the deflator to prop up the headline real growth prints. Here’s an economy which, according to the CCP leadership, isn’t at risk of deflation, but which just saw nominal GDP run well below real GDP for a second straight year.

As the figure shows, the deflator just spent a seventh quarter in negative territory, and according to some (most?) estimates, it’ll be negative for the full year in 2025 too. The last time the deflator was negative for three years in a row was… well, never, unless you’re inclined to think calculations from the early 1960s have any meaning or relevance.

“The GDP deflator deteriorated further and we continue to find it bit difficult to reconcile the GDP headline and the expenditure breakdowns,” SocGen’s Wei and Lam went on, in the same note cited here at the outset.

And see, that’s the thing. It’s ostensibly possible to make all of this add up, but you don’t want to try too hard. Because if you come away unable to “reconcile” the math, you have a dilemma: Raise questions about the veracity of the data, or look the other way. Anyone based in Beijing (or even in Hong Kong), is advised to keep their head down and their mouth shut. When Gao Shanwen decided instead to publicly question the numbers early last month, Xi was “furious” and, according to the Wall Street Journal, “banned Gao from speaking publicly for an unspecified period.”

Activity data covering December, released alongside the GDP tally Friday, showed a sharp upturn in industrial production, which allegedly grew 6.2%, the best showing since April and nearly a full percentage point ahead of estimates.

Retail sales, on the other hand, grew just 3.7%, better than November’s lackluster readout, but very sluggish all the same. As the figure shows, China’s still leaning into (and on) its factories to keep the train on the tracks.

What strength there was on the consumption side last month came courtesy of a government “replacement” scheme. Sales of home appliances, for example, surged more than 20%, a solid encore from November’s 40% increase. Car sales jumped 7%. By contrast, sales of smaller consumer items (i.e., goods which didn’t enjoy a boost tied to government subsidies) fell in December.

Recent news flow suggests Beijing will hand out more consumption “vouchers” for the Lunar New Year holiday, but as SocGen’s Lam remarked, “a sustained recovery will ultimately require stabilizing house prices and a turnaround in the labor market. That will take much longer.”

The same Friday data blitz showed home price declines at least moderated in December. As for the labor market, no one knows what’s actually going on there, but the surveyed urban jobless rate ticked up to 5.1% last month. It was the first increase since August.