China’s economy expanded by 5 per cent in 2025, achieving the government’s annual target despite recording one of the slowest growth rates in decades, as exports compensated for subdued domestic demand and a lingering property slump.
According to China’s National Bureau of Statistics, the full-year gross domestic product reached 140,187.9 billion yuan, with quarterly growth decelerating throughout the year: 5.4 per cent in the first quarter, 5.2 per cent in the second, 4.8 per cent in the third, and 4.5 per cent in the fourth. This performance, while meeting official expectations, fell short of the historical average of around 8 per cent seen between 2000 and 2025, highlighting persistent structural challenges amid global trade tensions and internal imbalances.
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The resilience in 2025 stemmed largely from robust exports, which increased by 6.1 per cent to 26,989 billion yuan, contributing to a record trade surplus of nearly 1.2 trillion US dollars. Chinese firms diversified markets in Asia, Africa, Latin America, and Europe to counter US tariffs imposed under President Donald Trump, sustaining external demand even as domestic consumption faltered. However, this export-led strategy has raised concerns about overreliance on foreign markets, especially with projections indicating slower global growth.
Domestic sectors continued to drag on the economy. Retail sales rose by just 0.9 per cent in December, the weakest monthly increase since the end of strict COVID-19 restrictions in late 2022, reflecting cautious consumer spending amid job uncertainties and deflationary pressures. Fixed-asset investment contracted by 3.8 per cent for the year, with infrastructure spending down 2.2 per cent and real estate development plummeting 17.2 per cent, exacerbating the property crisis that has idled construction and strained local government finances.
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As reported by Reuters, while the 5 per cent growth met the target, the fourth-quarter slowdown to 4.5 per cent—the weakest in nearly three years—underscores mounting headwinds, including weak household confidence and a supply-demand mismatch. Net exports accounted for nearly one-third of GDP in 2025, up from previous years, while consumption contributed only 52 per cent, inverting typical patterns in mature economies and signalling the need for rebalancing towards internal drivers.
Looking ahead, economists anticipate further moderation. Data from World Bank estimates China’s growth at 4.9 per cent for 2025, with projections easing to 4.4 per cent in 2026, influenced by ongoing property adjustments, demographic declines, and potential escalations in trade barriers. The population contraction, faster than anticipated, further dampens long-term prospects, as a shrinking workforce limits productivity gains.
Despite these issues, industrial production provided some uplift, with value-added output from large enterprises rising 5.9 per cent, driven by 9.2 per cent growth in equipment manufacturing and 9.4 per cent in high-tech sectors. This innovation-led progress aligns with Beijing’s push for high-quality development, though it has yet to fully offset broader weaknesses.
Policymakers face calls for bolder stimulus in 2026 to boost consumption and stabilise the property market, potentially through fiscal measures and monetary easing. New bank loans hit a seven-year low of 16.27 trillion yuan in 2025, indicating sluggish credit demand and the urgency for targeted interventions. With the 15th five-year plan commencing this year, sustaining momentum will require addressing entrenched imbalances to foster more balanced and inclusive growth.