Quick Bites | China Chugs Along at 5% GDP Growth

While the headline number of 5% GDP growth is according to plan, lift the hood and the signs are less reassuring: the headline looks ok, but the underlying picture does not. Growth has become increasingly lopsided, propped up by exports while households are tentative amid fragile domestic demand.

Officially, China’s GDP grew 5% across 2025 – even as President Trump’s tariff war commenced – with booming exports offsetting anaemic growth in the domestic economy. The results underline challenges for Beijing’s policymakers as the economy becomes increasingly reliant on exports to support growth. All the while, Trump’s policies create greater uncertainty over global trade.

China’s GDP reaches Rmb140 trillion (about US$20 trillion)

Source: Financial Times

Some doubt the reliability of China’s GDP numbers, but that said, data released highlights the country’s “two-speed” economy. Industrial production exceeded expectations while indicators of domestic demand, from property to retail sales, disappointed. Also, the birth rate hit a record low, underlining long-term structural issues in the domestic economy.

Source: FT

While the full year GDP growth figure was in line with the target, the pace of growth slowed as the year progressed. Economic growth decelerated in the fourth quarter to 4.5%, and the fourth-quarter figure was down from 4.8% in the third quarter.

The slowdown will put pressure on Beijing to add more stimulus this year to meet an expected GDP growth target of between 4.5% and 5%. China’s fixed-asset investment declined for the first time last year while exports remained resilient. Beijing has become increasingly concerned about the domestic demand slowdown, and has pledged to undertake more fiscal stimulus measures and central bank interest rate cuts.

Source: FT

President Xi Jinping is due to preside over the annual meeting of China’s National People’s Congress in March, at which Beijing will unveil economic targets.

China’s fixed asset investment fell 3.8% year on year in 2025, the first full-year decline since the 1990s. The property sector also is still weak. Property investment sank 17% last year, as the country’s real estate downturn completed its fourth year with no sign of an end. New construction starts fell 20% year on year.

Source: FT

Growth last year was bolstered by stronger services and exports. While exports will continue to grow due to China’s competitiveness, a more fully valued renminbi is anticipated and would be welcomed. Beijing should allow its currency to appreciate, and thereby calm trading partners’ concerns over its ever-growing surpluses.