In 2024, China's economy marked a 5% growth in GDP, surpassing 134 trillion yuan (approximately 18.77 trillion USD), successfully meeting the government's annual targetsThis progress is noteworthy given the complexities of both domestic and international circumstances, yet the underlying factors and the sustainability of this growth warrant further explorationThe recovery showcases multi-layered dynamics, influenced by a spectrum of elements including government stimulus policies, a brief uptick in exports, and intricate economic environmentsOne aspect that has historically been overlooked yet is gaining traction is the role of "narrative" in economic recovery.

The primary impetus for China's economic growth in 2024 can be attributed to a timely package of incremental policies from the governmentThe introduction of a 10 trillion yuan fiscal stimulus plan aimed to specifically address local government debt risks, boost investment, and invigorate consumption

Critical elements of the policy encompassed lowering benchmark lending rates and expanding consumer goods replacement schemes to stabilize the economyFor instance, subsidies for household appliances and automobiles directly contributed to an uptick in retail sales, with the total retail sales of consumer goods increasing by 3.5% year-on-year, particularly robust in the fourth quarterAdditionally, fixed asset investment in infrastructure and manufacturing experienced a year-on-year growth of 3.2%, providing a significant backbone for the economic upliftEspecially noteworthy was the performance of the high-tech manufacturing and equipment sector, where the industrial added value for major enterprises rose by 5.8% throughout the year, showcasing China's ongoing efforts toward industrial upgrade.

Despite these positive developments precipitated by policies, the sustainability of economic growth faces challenges stemming from weak consumption and structural issues

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One prominent challenge lies in the ability of the real estate market to stabilize and recoverThe real estate sector is pivotal not only to local government financial health but also extensively impacts the performance of related upstream and downstream industriesFurthermore, the persistent imbalance in urban and regional development remains a significant concern.

In such a context, the recovery of China's economy not only hinges on policy interventions but increasingly leans on the driving force of "popular narratives." Robert Shiller, a Nobel laureate in economics, accentuated in his theory of "narrative economics" that narratives, propelled by emotions and social dissemination, can significantly influence collective economic behaviors and shape market expectationsIn China, this theory's applicability is progressively clarifyingFor example, remarks made by central bank governor Pan Gongsheng in September 2024 momentarily galvanized market optimism, triggering a wave of "narrative contagion" reflected in stock market upswings

However, this positive market narrative ultimately faced disruptions, undermining the tangible effects of the policies.

By mid-January 2025, a new narrative began to germinate: as "TikTok refugees" flocked to the "Xiaohongshu" platform, the potential for this phenomenon to gain further traction could possibly ignite broader consumer enthusiasm, thereby propelling China's economic recoveryAs a vital component of consumption, the tourism industry possesses substantial multiplier effects, indicating that once a narrative achieves "contagion," it could lead to a synchronized recovery across various sectorsUnlike previous instances, these grassroots narratives emerging from social media do not rely on official policy promotion, but rather arise organically within societyThus, it becomes crucial to afford the market greater freedom to develop independently, allowing these narratives to evolve and unleash latent economic growth potential.

Nonetheless, the formation and propagation of narratives do not necessarily negate the structural issues intrinsic to the Chinese economy

For instance, while stimulative policies have provided a short-term boost in consumption, consumer confidence has not fully recovered, particularly against the backdrop of a sluggish real estate market and income inequality, limiting the full potential of consumption growthDespite these concerns, China's progress in innovation and the green economy holds promise for high-quality development in the futureIn 2024, China improved its position to 11th in the global innovation index, reflecting its sustained efforts in research and development investment and the translation of technological achievementsFurthermore, the rapid advancement seen in electric vehicles and clean energy technology indicates a gradual aversion from reliance on traditional industrial frameworks and high-carbon economiesEven though this structural transformation requires time to materialize, it reveals a resilient aspect of China's economy.

Looking ahead to 2025, the Chinese government plans to continue pursuing measures under "more proactive fiscal policies" and "moderately accommodative monetary policies" aimed at expanding domestic demand and implementing structural reforms

Nevertheless, the actual impact of these policies remains contingent upon the global economic environment, domestic market conditions, and the efficacy of policy implementationFor instance, if global external demand continues to languish, the challenge will be for China to maintain sustained recovery through a domestic demand-centric growth modelMoreover, whether the prolonged adjustments within the real estate sector will further strain local fiscal capacities poses an immediate threat that will significantly influence the vigor of policy execution.

In summation, the 2024 achievement of growth targets within China's economy is indicative of the short-term efficacy of policy interventions while simultaneously reflecting deeper structural challenges embedded within the economyAgainst this backdrop, the significance of narrative becomes increasingly paramountWhether it stems from government-led policy narratives or consumer-driven narratives birthed on social media, these narratives could shape the trajectory of economic recovery ahead