A new analysis of China’s economic performance by CEI reveals a definitive shift in its growth model, with high-tech innovation and domestic consumption becoming the primary engines of expansion, offsetting persistent weaknesses in the property sector and global trade headwinds.
The report, which synthesises data from national statistics and international institutions including the Asian Development Bank, charts the evolution of China’s GDP drivers over the past five years. It concludes that the world’s second-largest economy has successfully navigated a complex post-pandemic landscape by accelerating its transition away from debt-fuelled investment and towards a more sustainable, consumption-led model.
The most striking transformation is in the industrial sector. By 2024, value-added in high-tech manufacturing surged by 8.9 per cent, accounting for 16.3 per cent of total industrial output. This was complemented by the rapid rise of the “new three” industries—solar panels, lithium-ion batteries, and electric vehicles—which have become powerhouse exports. The analysis highlights that China is now the first country to produce more than 10m new energy vehicles annually, a testament to its strategic prioritisation of green technology.
Underpinning this industrial upgrade is a massive bet on innovation. The report notes that China’s research and development expenditure intensity reached 2.68 per cent of GDP in 2024, exceeding the European Union average. This investment has yielded tangible results: high-value patent applications have soared, and the enterprise patent industrialisation rate reached 53.3 per cent.
Perhaps the most significant change is the role of domestic consumption. According to the analysis, consumption’s contribution to GDP growth has climbed steadily, reaching 78 per cent by 2025, up from 54.3 per cent in 2020. This shift has been fuelled by improving labour markets and rising household incomes, which grew 5.6 per cent year-on-year in the first quarter of 2025. The report attributes this to a “successful economic rebalancing” that has created a more resilient domestic engine for growth.
This domestic strength has been crucial in buffering against external volatility. While China maintained its position as the world’s top goods trader for an eighth consecutive year in 2024, the report details a strategic diversification of markets. ASEAN has emerged as China’s largest trading partner, accounting for over 19 per cent of its trade surplus and reducing reliance on traditional Western markets.
The transition has not been entirely smooth. The analysis confirms that investment in real estate development declined by 5.4 per cent in 2024, a deliberate contraction following years of excess. However, this has been more than offset by a 37.4 per cent surge in investment in information services and consistent growth in high-tech manufacturing.
The report ultimately paints a picture of an economy in the midst of a carefully managed structural transformation. While challenges remain, particularly in local government finance and consumer confidence, the data suggests that China’s bet on “new quality productive forces” is beginning to yield dividends, creating a growth profile that is less volatile and more technologically advanced.