China’s economy achieved a 5% annual growth rate in 2025, meeting the government’s official target despite facing significant headwinds from a slowing property market and persistent consumer spending weaknesses. The expansion was primarily driven by robust export performance, which generated a record $1.2 trillion trade surplus and helped offset domestic economic vulnerabilities.
The year-end figures revealed a concerning trend, however, with fourth-quarter growth decelerating to 4.5% – the slowest quarterly pace since China began easing its stringent COVID-19 restrictions in late 2022. This represents a noticeable drop from the previous quarter’s 4.8% growth rate, indicating mounting economic pressures.
Export resilience emerged as the economy’s primary growth engine, though economists question its sustainability. Lynn Song, ING’s chief economist for Greater China, noted: “The key question is how long this engine of growth can remain the primary driver.” While Chinese exports to the U.S. declined following President Trump’s return to office and imposition of new tariffs, increased shipments to other global markets compensated for these losses.
The government’s efforts to stimulate domestic demand through various initiatives, including trade-in programs for vehicles and home appliances, have yielded limited success. These programs have been losing momentum in recent months, failing to significantly boost consumer confidence or spending.
Chi Lo, senior market strategist at BNP Paribas Asset Management, emphasized that “stabilization, not necessarily recovery, of the domestic property market is key to revive public confidence and household consumption.” Many small businesses and ordinary citizens continue facing economic hardships, with restaurant owner Liu Fengyun from Guizhou province reporting that customers increasingly cite financial constraints: “Money is hard to earn now” and “making breakfast at home is cheaper.”
Looking ahead, economists project further moderation in growth, with Deutsche Bank forecasting approximately 4.5% expansion for 2026. This slowdown aligns with China’s broader economic transition as it prioritizes technological self-reliance through investments in artificial intelligence and advanced technologies while navigating complex global trade dynamics and domestic structural challenges.
