In 2025, China’s economy grew at an annual rate of 5%, underpinned by robust exports despite the imposition of tariffs by U.S. President Donald Trump. However, the pace of growth decelerated to 4.5% in the final quarter of the year, marking the slowest quarterly growth since late 2022. This decline followed the easing of strict COVID-19 restrictions, as the prior quarter saw a growth rate of 4.8%.
Chinese authorities have been striving to accelerate economic growth following a downturn in the property market and other disruptions caused by the pandemic. The annual growth achieved in 2025 was consistent with the government's target of "around 5%". Specifically, the economy grew by 1.2% from October to December.
Strong exports played a crucial role in offsetting weaknesses in consumer spending and business investment, resulting in a record trade surplus of $1.2 trillion. Although exports to the U.S. suffered after tariffs were amplified following Trump’s return to office, there was a compensating increase in shipments to other global markets. This uptick in exports led other governments to react, with some, including Mexico and the European Union, either raising import duties or threatening to do so.
To alleviate the pressure on exports, Trump and Chinese President Xi Jinping reached an agreement to extend a truce on tariffs; however, exports to the U.S. still faced a significant decline of 20% during the year. Economists, such as Lynn Song from ING, expressed concerns about the sustainability of export-driven growth, especially if further economies follow suit in raising tariffs against China.
China has been trying to put emphasis on boosting domestic demand as a long-term strategy, but results have been limited thus far. Despite initiatives like a trade-in program encouraging consumers to exchange older vehicles for more energy-efficient models, its popularity has waned recently. Chi Lo, a senior market strategist at BNP Paribas Asset Management, highlighted the necessity of stabilizing the domestic property market to foster public confidence, household consumption, and private investment.
The Chinese government has also introduced trade-in subsidies for household appliances to stimulate consumer spending. While such policies will likely persist into 2026, there may be a reduction in their magnitude, according to analysts like Weiheng Chen from J.P. Morgan Private Bank.
Investments in emerging areas such as artificial intelligence and advanced technologies remain a priority for the Chinese Communist Party as it seeks self-reliance and aims to compete with the United States. However, many ordinary citizens and small businesses are facing hardships, reporting uncertainty regarding jobs and incomes. Liu Fengyun, a 53-year-old owner of a noodle restaurant in Guizhou province, noted that consumer behavior has shifted, with customers citing financial difficulties leading them to prepare meals at home instead of dining out.
Kang Yi, head of China’s National Bureau of Statistics, remarked on the "steady progress" of the economy in 2025 in light of various pressures, asserting that it possesses a "solid foundation" for mitigating risks. Nevertheless, some economists argue that actual growth may have been slower than the official figures suggest, with predictions from the Rhodium Group estimating growth of only 2.5% to 3% for the year.
The Chinese economy saw a 5% growth rate in 2024 and 5.2% in 2023, as reported by government statistics. Notably, official growth targets have been declining over recent years, dropping from 6% to 6.5% in 2019 to the current "around 5%" for 2025. Projections for 2026 anticipate even slower growth, with Deutsche Bank estimating a 4.5% increase.
A stable economy is deemed vital for social stability, a primary concern for China's leadership. While it is believed that social stability can be maintained even with lower growth rates, Beijing remains committed to sustaining economic expansion. Analysts, such as Neil Thomas from the Asia Society Policy Institute, indicate that to reach its soft target of a $20,000 GDP per capita by 2035, China essentially needs to maintain an annual growth rate of approximately 4% to 5%.
