HONG KONG (AP) — In 2025, China's economy registered an annual growth rate of 5%, driven primarily by robust exports, despite the headwinds posed by tariffs implemented by U.S. President Donald Trump. However, growth experienced a slowdown, recording a rate of 4.5% in the last quarter of the year, marking the slowest quarterly growth since late 2022. This decline occurred as China was beginning to unwind strict COVID-19 pandemic restrictions.
The Chinese economy, which ranks as the world's second largest, had previously achieved a 4.8% growth rate in the preceding quarter. Chinese authorities have been actively working to stimulate faster economic growth following a downturn in the property market and various disruptions caused by the pandemic. The annual growth rate for 2025 aligned with the government's official target of "around 5%."
In terms of quarterly performance, the economy expanded by 1.2% from October to December. Strong export performance played a critical role in offsetting weak domestic consumer spending and business investment, contributing to a historic trade surplus of $1.2 trillion. Although exports to the U.S. decreased significantly after President Trump resumed office and reinstated tariffs, this decline was mitigated by an increase in shipments to other parts of the world. However, other governments have responded to soaring imports of Chinese goods by imposing protective measures, including raising import duties.
The tariff conflict saw a temporary truce between Trump and Chinese leader Xi Jinping, which helped ease some pressures on Chinese exports. Despite this, China’s exports to the U.S. still fell by 20% over the past year. Lynn Song, chief economist for Greater China at Dutch bank ING, expressed concern regarding the sustainability of export-driven growth, warning that increasing tariffs from other economies could tighten conditions in the future.
Chinese leaders have emphasized the need to bolster domestic demand as a focal point of their economic policy, but progress has been limited thus far. Initiatives like a trade-in program designed to encourage consumers to replace older vehicles with energy-efficient models have lost momentum in recent months. Chi Lo, a senior market strategist for Asia Pacific at BNP Paribas Asset Management, highlighted that stabilizing the domestic property market is crucial for reinstating public confidence, household consumption, and private investment.
Additionally, the government has provided trade-in subsidies for home appliances to stimulate consumer spending. Major stimulus measures, including these subsidies, are expected to carry into 2026, although they may be adjusted downwards, according to Weiheng Chen, a global investment strategist at J.P. Morgan Private Bank. Investment in sectors such as artificial intelligence and advanced technologies continues to be a top priority for the Communist Party, aiming to enhance self-reliance and compete against the U.S. Meanwhile, many ordinary Chinese citizens and small businesses continue to face financial struggles and uncertainty regarding employment and income.
Liu Fengyun, a 53-year-old owner of a noodle restaurant in Guizhou province, reported that business has markedly dwindled, with customers expressing difficulty in earning money and opting for home-cooked meals instead. She noted a pervasive sense of economic pessimism among her patrons, who feel that the overall environment is unfavorable.
Kang Yi, head of China’s National Bureau of Statistics, commented on Monday that despite multiple pressures, the economy achieved "steady progress" in 2025 and possesses "solid foundations" to counter risks. Nonetheless, some analysts believe that the real growth rate might have been lower than the official figures suggest, with the Rhodium Group projecting that actual growth hovered between 2.5% and 3% in the previous year.
China's economy recorded annual growth rates of 5% in 2024 and 5.2% in 2023. In recent years, official annual growth targets have declined from a range of 6% to 6.5% in 2019 to around 5% in 2025. Looking ahead, a further slowdown in growth is anticipated for 2026, with Deutsche Bank forecasting an increase of approximately 4.5%.
A stable economy is essential for maintaining social stability, which remains a top priority for China's leaders. While it is feasible for China to sustain social stability at lower economic growth rates, there is a clear desire from Beijing for continued economic expansion. Analysts notably suggest that sustaining a 4% to 5% annual growth rate is vital for achieving the goal of a $20,000 gross domestic product (GDP) per capita by 2035.
