China’s economy grew by 5 per cent last year, hitting Beijing’s official goal thanks to a record trade surplus that offset domestic weaknesses. Growth slowed to 4.5 per cent in the final quarter of 2025 for the world’s second-largest economy.
The year brought struggles to raise consumer spending, a drawn-out property crisis and fallout from U.S. President Donald Trump’s tariffs. Experts call it a “two-speed economy,” with manufacturing and exports lifting activity while cautious households and a slumping housing market hold it back. Retail sales rose just 0.9 per cent in December, the slowest in three years, though factory output hit 5.2 per cent.
Births fell to 7.9 million in 2025, the lowest since 1949 per National Bureau of Statistics figures. This drop will cut demand for homes and goods, piling pressure on the property sector. Population shrank by 3.4 million to 1.4 billion for the fourth year running, deepening the demographic crunch despite family incentives.
A $1.19 trillion trade surplus—the biggest ever—came from exports to non-U.S. markets. “China is effectively pushing growth through exports at a loss, and that is not sustainable. Cutting prices may keep volumes up, but it undermines profits and, ultimately, growth,” Alicia Garcia-Herrero, chief economist for Asia Pacific at French bank Natixis, told the BBC.
Kang Yi, head of China’s National Bureau of Statistics, said the economy “faces problems and challenges, including strong supply and weak demand” but will “maintain stable, sound growth momentum this year.” Export dependence raises risks from trade tensions, with a U.S. tariff pause ending in November 2026.
House prices dropped 2.7 per cent year on year in December—the steepest in five months—and property investment fell 17.2 per cent. The sector, once a quarter of GDP, has hit construction, wealth and local budgets, leaving many with unfinished homes.
Policymakers held back stimulus after hitting the target, saving it for this year’s “proactive” plans amid fragile foundations.
“We think growth is weaker than official figures suggest,” said Zichun Huang, China economist at Capital Economics, who reckons the official numbers “overstate the pace of economic expansion” by at least 1.5 percentage points.