The Chinese economy surprised analysts on Friday, outperforming growth expectations for the December quarter and helping the government achieve its about five per cent growth target for 2024.
But with external economic challenges, a faltering property sector and sluggish consumer activity, more stimulus is needed to maintain the pace of economic growth, said Westpac economists Ryan Wells, Elliot Clarke and Illiana Jain.
"These outcomes point to resilience in China's economy, but also a need for further significant policy support in coming months," they said.
"Following lunar new year celebrations at the end of January, look for additional actions by policy makers targeting consumer income and sentiment as well as property and equity markets."
As China's property market contracts, the outlook for coal and iron ore exporters is less rosy. (Darren Pateman/AAP PHOTOS)
Looming over China's economic outlook is the shadow of incoming US president Donald Trump's threatened 60 per cent tariffs on Chinese imports.
Largely responsible for the better-than-expected GDP figures was a big uptick in industrial production, underpinned by frontloading from US importers eager to get in stock before any potential tariffs imposed after Mr Trump's inauguration on Tuesday, Australian time.
But it is still unclear to what extent the extravagantly coiffured septuagenarian will follow through on his promise, with recent murmurings from the incoming administration hinting at a more incremental approach.
ANZ economist Vicky Xiao Zhou expects the tariffs to come in around 10-20 per cent, which would have an overall negative impact to Chinese GDP of 0.5 per cent - similar to the trade war between the two nations in Mr Trump's first presidency.
In a report released on Friday, the World Bank predicted Chinese economic growth to slow to 4.5 per cent in 2025 before growing at four per cent the following year, "as rising corporate sector and public debt weigh on investment, and slowing productivity growth constrains incomes and consumption".
In response, China is likely to introduce additional stimulus, which could benefit the Australian economy.Â
"The determination to develop battery technology and clean energy will give a really positive outlook for industrial metal exports from Australia, for example, copper, aluminium and zinc," Ms Zhou told AAP.
Stimulus measures to boost Chinese domestic consumption could benefit Australian agricultural exporters, such as wool and dairy producers, with greater demand for premium products, she said.
Weakness on the part of Chinese consumers has impacted the Australian tourism industry, with Chinese tourist numbers still 40 per cent lower than the pre-COVID peak.
"If China stimulus helped and injected more money into household pockets, then we can see a tourist rebound to Australia, hopefully, in 2025."
Regardless, traditional export patterns between Australia and its largest trading partner are set to change fundamentally, Ms Zhou said.
As China's economy increases in complexity and its property market continues to contract, the outlook for coal and iron ore exporters is less rosy.
"Fundamentally, China is experiencing a structural change in the economy, shifting from low-end manufacturing up the production line," she said.
"But it will benefit the other side of the Australian market."
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