China’s economy grew 5% in 2025, meeting the government’s official target as strong exports helped cushion the impact of weak domestic demand and mounting trade pressures from the United States under U.S. President Donald Trump.
Data released Monday showed that growth slowed noticeably toward the end of the year, with gross domestic product expanding at a 4.5% annual pace in the fourth quarter. That marked the slowest quarterly growth since late 2022, when COVID-19 restrictions weighed heavily on activity. In the previous quarter, the economy grew 4.8%.
Despite the deceleration, the full-year result underscores the resilience of the world’s second-largest economy at a time when policymakers are grappling with a prolonged property downturn, fragile consumer confidence and heightened geopolitical tensions.
Exports were the main bright spot. Overseas shipments surged even as the Trump administration raised tariffs on Chinese goods after returning to office in early 2025. While exports to the United States declined, shipments to other markets expanded strongly, pushing China’s trade surplus to a record $1.2 trillion for the year.
“Exports have clearly become the primary engine of growth,” said Lynn Song, chief economist for Greater China at ING. “The key question is how long this engine can remain dominant, especially if trade frictions continue to broaden.”
China’s export boom has drawn scrutiny abroad. Rising imports of Chinese goods have prompted several governments to consider or implement protective measures to shield domestic industries. Mexico has already raised tariffs on some Chinese products, while the European Union has warned it could take similar steps.
“If more economies start ramping up tariffs, the pressure on China’s external sector will eventually intensify,” Song said.
At home, economic conditions remain uneven. Consumer spending and private investment lagged behind exports, reflecting lingering caution among households and businesses. The prolonged slump in the property market has weighed heavily on confidence, as falling home prices erode household wealth and discourage spending.
Chinese authorities have rolled out a range of measures aimed at boosting domestic demand, but results have been mixed. A trade-in program encouraging drivers to replace older vehicles with more energy-efficient models initially gained traction but has lost momentum in recent months. Similar subsidy schemes for home appliances, including refrigerators and washing machines, have provided some support but have not triggered a broad rebound in consumption.
“Stabilization of the property market, rather than a rapid recovery, is essential to restoring confidence,” said Chi Lo, senior market strategist for Asia-Pacific at BNP Paribas Asset Management. “Without that, it is difficult to see a sustained revival in household consumption and private investment.”
Looking ahead, Beijing is expected to maintain its focus on targeted stimulus rather than sweeping consumer handouts. According to Weiheng Chen, global investment strategist at J.P. Morgan Private Bank, existing consumer subsidy programs are likely to continue into 2026 but may be gradually scaled back as fiscal pressures mount.
At the same time, investment in strategic sectors such as artificial intelligence, semiconductors and advanced manufacturing remains a top priority for China’s ruling Communist Party. Leaders see technological self-reliance as critical to long-term growth and to competing with the United States amid escalating strategic rivalry.
However, challenges persist. Many small businesses and workers continue to face uncertainty over jobs and incomes, and some economists question whether official growth figures fully capture the economy’s underlying weakness. The Rhodium Group, a U.S.-based research firm, has estimated China’s actual growth in 2025 at closer to 2.5% to 3%.
Official data show China’s economy grew 5% in 2024 and 5.2% in 2023, though growth targets have gradually been lowered over recent years, from above 6% before the pandemic to “around 5%” today.
Most forecasters expect further moderation in 2026. Deutsche Bank projects China’s economy will expand by about 4.5% next year, reflecting softer global demand, trade headwinds and the limits of policy support.
As exports carry an increasingly heavy burden, analysts warn that sustaining growth will depend on Beijing’s ability to revive domestic demand without exacerbating financial risks.
