China’s 2025 Growth Hits 5% as Export‑Driven Trade Surplus Offsets Domestic Weakness
Updated (2 articles)
2025 GDP Meets Official 5% Target, Q4 Slows to 4.5% China reported a 5% year‑on‑year expansion in 2025, exactly matching the government’s goal, while the final quarter fell to a 4.5% pace, the slowest since late‑2022 [1][2]. The slowdown highlights a divergence between robust export performance and lingering weakness in household consumption and investment [1][2]. A record $1.2 trillion trade surplus helped lift the annual figure despite the domestic drag [1][2].
Exports Cushion Weak Domestic Demand Exports to the United States dropped about 20% in 2025 due to higher tariffs, but a tariff truce and strong shipments to other regions kept overall export volumes high [1][2]. The external demand surge underpinned the record trade surplus and offset the slump in domestic spending [1][2]. Analysts note that manufacturing output rose 5.2% in 2025, reinforcing the export‑led growth narrative [2].
Consumer Spending, Property Market, and Demographics Remain Fragile Retail sales grew only 0.9% in December, the weakest three‑year stretch, while property prices fell 2.7% year‑on‑year and investment plunged 17.2% [2]. Births fell to a historic low of 7.9 million and the total population shrank by roughly 3.4 million to 1.4 billion, deepening long‑term demand concerns [2]. Both outlets stress that these domestic weaknesses limit the sustainability of growth driven primarily by exports [1][2].
Analysts Predict Slower Momentum in 2026 Deutsche Bank projects 2026 GDP growth near 4.5%, indicating a deceleration from the 2025 outturn [1]. Capital Economics argues the official 5% figure may overstate real expansion by about 1.5 percentage points, reflecting uncertainty over investment and consumption data [2]. The consensus points to a need for policy adjustments to revive internal demand while maintaining export competitiveness [1][2].
Sources
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1.
AP: China’s 2025 economy expands 5% – Details the 5% growth, Q4 slowdown, record $1.2 trillion trade surplus, 20% fall in U.S. exports, tariff truce, and Deutsche Bank’s 2026 forecast .
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2.
BBC: China hits 5% growth as exports defy tariffs – Highlights the same 5% result, export‑driven surplus, domestic consumption weakness, demographic decline, property price drop, and Capital Economics’ skepticism about the data’s accuracy .
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Timeline
2025 – China’s GDP expands 5% year‑on‑year, exactly meeting the government’s target, while fourth‑quarter growth slows to 4.5%, the weakest quarterly pace since late‑2022, underscoring a divergence between robust external demand and soft domestic activity. [1][2]
2025 – Exports generate a record $1.2 trillion trade surplus, offsetting a 20% drop in shipments to the United States after tariff hikes, and a tariff truce later in the year eases pressure on other markets. [2]
2025 – The property sector remains under pressure: December home prices fall 2.7% YoY, the steepest decline in five months, and total property investment contracts 17.2% for the year, dragging construction, household wealth, and local‑government finances. [1]
2025 – Demographic headwinds intensify as births tumble to 7.9 million—the lowest since 1949—and the population shrinks for the fourth straight year, losing roughly 3.4 million people to a total of about 1.4 billion. [1]
2025 – Industrial activity outpaces consumption: factory output rises 5.2% while retail sales creep up only 0.9% in December, the slowest three‑year pace, highlighting a two‑speed economy. [1]
2025 – Some economists argue the official 5% figure may overstate real growth by about 1.5 percentage points, given weak investment and consumer spending, casting doubt on the robustness of the data. [1]
2026 (forecast) – Deutsche Bank projects China’s GDP growth will decelerate to roughly 4.5% in 2026, and analysts note that sustaining 4‑5% annual expansion is essential to reach the 2035 goal of $20,000 per‑capita GDP. [2]