China’s economy grew by 5 per cent in 2025, meeting the government’s annual growth target despite sluggish domestic activity and ongoing trade tensions with the United States. The growth was supported primarily by strong exports, which helped the country navigate challenges from slower consumer spending, low investment, and deflationary pressures.
Data released by Chinese authorities show that GDP rose 5 per cent year‑on‑year, although growth slowed in the fourth quarter to 4.5 per cent, marking the weakest quarterly expansion since the country reopened after the pandemic. Nominal GDP, which does not account for inflation, rose only 4 per cent, highlighting the pressure on domestic economic activity.
Exports remained the key driver of growth. Demand from overseas markets, including Europe, Southeast Asia, Latin America, and Africa, helped offset a slowdown in shipments to the United States caused by higher tariffs. China’s trade surplus reached about $1.2 trillion in 2025, underlining the strength of its external sector.
Domestic consumption and investment, however, showed uneven performance. Retail sales rose only modestly, while fixed‑asset and private investment weakened. Deflation continued for a third straight year, limiting consumer spending and overall confidence. Industrial production held up better, but the domestic economy’s recovery remained fragile.
Policy makers in Beijing acknowledge the imbalance between strong exports and weak internal demand. Plans under the new five‑year strategy aim to strengthen household consumption and the service sector, but authorities are cautious about large-scale stimulus due to local government debt and inflation concerns.
Analysts warn that China’s heavy reliance on exports makes growth vulnerable to future global trade disruptions. Sustainable long-term expansion will depend on boosting domestic demand and implementing structural reforms to encourage private investment and household spending.
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