China’s economy recorded one of its slowest expansions in decades in 2025, official figures released on Monday showed, underscoring widening internal weaknesses even as Beijing claimed it met its growth target. Gross domestic product (GDP) grew by about 5 per cent in 2025, a pace that officials had set as a target and one that technically satisfied policymakers, but economists say the headline figure masks troubling trends beneath the surface.
While 5 per cent growth keeps China among the faster-expanding major economies globally, the rate represents a marked deceleration from its historical performance and is among the slowest outside the exceptional pandemic year of 2020. On a nominal basis — unadjusted for price changes — China’s economy may have grown as little as about 4 per cent, the weakest such reading since 1976, excluding the pandemic period. Persistent deflationary pressures, stagnant households incomes and an aging population have dampened the overall economic momentum.
Growth slowed sharply toward the end of the year, with GDP up 4.5 per cent in the fourth quarter compared with the same period a year earlier, according to data compiled from multiple reports. That quarterly pace was the slowest expansion since late 2022 and reflected weak domestic demand. Retail sales, a key measure of consumer spending, rose only marginally, highlighting that Chinese households remain cautious about spending amid concerns over job prospects and broader economic uncertainty.
The property sector, long a cornerstone of China’s growth model, continued to struggle throughout 2025. Investment in real estate plunged sharply — by double-digit percentages — as developers faced heavy debt burdens and buyers stayed wary. Fixed-asset investment overall declined, reflecting a broader pullback from industries that once fuelled high-speed growth. Analysts say the sector’s stagnation has eroded household wealth and confidence, contributing to the broader slowdown.
Chinese leaders have attempted to mitigate these challenges by loosening fiscal policy and rolling out subsidies for consumer goods to encourage purchases, but these measures have so far had limited success in sparking a sustained recharge in domestic spending. Policy advisers argue that boosting household incomes and strengthening social safety nets will be critical to shifting the economy toward a model reliant more on consumption rather than investment and exports.
Exports, however, remained a relative bright spot last year. Overseas shipments helped generate a record trade surplus of about $1.2 trillion, with robust demand from markets in Southeast Asia, Africa and Europe offsetting a sharp drop in exports to the United States. Trade ties with the U.S. have been complicated by tariff disputes after President Donald Trump’s return to the White House, although a tentative truce on trade measures negotiated between Chinese President Xi Jinping and Trump in late 2025 helped ease some immediate pressures.
Even with the trade surplus and headline growth meeting official goals, the broader economic picture remains challenging. Analysts warn that structural issues — from deflation and demographic decline to persistent weakness in property and consumer sectors — could slow China’s growth further in 2026 and beyond. Many believe that without significant policy shifts and deeper reforms, the world’s second-largest economy may face prolonged periods of subdued expansion, reshaping global economic dynamics.
