China’s economy grows 5% in 2025 as exports offset domestic weakness

Hong Kong (Journos News) – China’s economy expanded by 5% in 2025, meeting the government’s official growth target as strong exports helped counter weak consumer spending and subdued private investment, according to official data released on Monday.

The annual result masked a clear loss of momentum toward the end of the year. Economic growth slowed to 4.5% in the fourth quarter, the weakest quarterly pace since late 2022, when strict COVID-19 controls were still disrupting activity. Growth in the previous quarter had been 4.8%, underscoring a gradual deceleration in the world’s second-largest economy.

The figures highlight the delicate balance facing Beijing as it seeks to stabilize growth after years of pandemic-related disruptions, a prolonged property market downturn, and renewed external pressure from U.S. trade policies.

Export strength carries the economy

Exports remained the main engine of growth in 2025, helping China record a trade surplus of roughly $1.2 trillion, according to official data. Strong overseas demand helped offset sluggish household consumption and cautious business investment at home.

Chinese shipments to the United States fell after President Donald Trump returned to office early last year and began raising tariffs on Chinese goods. However, that decline was largely offset by rising exports to other markets, allowing overall export growth to remain resilient.

“The key question is how long this engine of growth can remain the primary driver,” Lynn Song, chief economist for Greater China at ING, wrote in a recent research note.

The surge in Chinese exports has prompted concerns among some trading partners. Governments in several economies have warned that rising imports of Chinese goods are putting pressure on local industries, leading some to consider or implement protective measures.

Song cautioned that if more countries follow the path of higher tariffs, “eventually, a tighter squeeze will be seen.” Mexico has already taken steps to raise duties on certain Chinese products, while the European Union has signaled it may consider similar actions.

Domestic demand remains fragile

Despite repeated pledges from China’s leadership to boost domestic demand, progress has been uneven. Consumer spending has remained weak, reflecting lingering uncertainty over jobs, income growth, and the outlook for the housing market.

A government-backed trade-in program encouraging drivers to replace older vehicles with more energy-efficient models initially provided a lift to consumption, but its impact has faded in recent months. Similar subsidies for home appliances such as refrigerators, washing machines, and televisions have also produced mixed results.

“Stabilization, not necessarily recovery, of the domestic property market is key to revive public confidence and, hence, household consumption and private investment growth,” said Chi Lo, senior market strategist for Asia Pacific at BNP Paribas Asset Management.

China’s property sector, once a major driver of growth, has been under strain for several years due to falling home sales, high developer debt, and tighter regulations. While policymakers have introduced measures to ease financing conditions and support buyers, a broad-based recovery has yet to take hold.

Policy support continues into 2026

Major consumer stimulus measures introduced in 2025 are expected to continue into 2026, though they may be scaled back. Weiheng Chen, global investment strategist at J.P. Morgan Private Bank, said in a recent note that while subsidies are likely to remain in place, authorities may become more selective as they assess their effectiveness and fiscal costs.

At the same time, Beijing has continued to prioritize investment in artificial intelligence and other advanced technologies. These sectors are seen as central to China’s long-term strategy to boost productivity, enhance self-reliance, and compete more effectively with the United States in high-value industries.

While headline growth has remained relatively strong, many small businesses and households continue to face financial pressure. Analysts note that employment uncertainty and weak income growth are weighing on consumer confidence, limiting the impact of policy support.

Questions over the data and outlook

Some economists and analysts remain skeptical of the official growth figures. The Rhodium Group, a U.S.-based research firm, said last month it estimated China’s economy grew by only 2.5% to 3% in 2025, well below the government’s reported rate.

Official data show China’s economy expanded by 5% in 2024 and 5.2% in 2023. Over the past several years, however, Beijing has gradually lowered its growth ambitions, moving from targets of 6% to 6.5% before the pandemic to “around 5%” in 2025.

Looking ahead, most forecasters expect growth to slow further in 2026. Deutsche Bank has projected that China’s economy will expand by about 4.5% next year, reflecting weaker exports, modest domestic demand, and ongoing structural challenges.

While China could likely maintain social stability at lower growth rates, policymakers remain focused on sustaining expansion. “Beijing wants the economy to keep growing,” said Neil Thomas, a fellow at the Asia Society Policy Institute’s Center for China Analysis.

Thomas added that China likely needs to maintain annual growth of roughly 4% to 5% to achieve its longer-term goal of reaching about $20,000 in gross domestic product per capita by 2035.