China Achieves Growth Target as Exports Withstand US Tariffs
China’s economy achieved a growth rate of 5% in 2025, successfully meeting the official target set by Beijing. This growth was primarily fueled by a record trade surplus, despite facing challenges such as a declining birth rate and turbulent domestic spending.
Key Economic Indicators
- Growth Rate: 5% for 2025
- Final Quarter Growth: 4.5%
- Trade Surplus: $1.19 trillion (£890 billion)
- Birth Rate: 7.9 million births, the lowest since 1949
- Population Decline: 1.4 billion, down 3.4 million over four years
- Property Investment Drop: 17.2% in 2025
- Retail Sales Growth: 0.9% in December
- Factory Output Growth: 5.2% in December
- House Price Decline: 2.7% year-on-year in December
Trade and Export Resilience
China’s economic expansion is characterized by its export resilience, particularly as the nation faced US tariffs. Many experts express concerns about the sustainability of this growth model. Alicia Garcia-Herrero, chief economist at Natixis, mentioned that pushing growth through exports at lower prices diminishes profits and could threaten future growth.
Challenges Facing Domestic Demand
The economy suffers from weak domestic demand, impacted by low consumer spending and a protracted real estate crisis. Economists worry that the declining birth rate will lead to reduced demand for housing and consumer goods, exacerbating the situation.
With house prices dropping significantly and a visible decline in property investment, the real estate sector, once a cornerstone of economic stability, now poses a substantial risk. Households have been affected by unfinished properties and declining values, undermining financial confidence.
Future Outlook
Experts highlight the need for Chinese policymakers to carefully navigate the recovery process. The balance between reviving growth through stimulus while managing rising debt will be crucial. Though leaders pledge proactive measures to stimulate domestic confidence, the underlying economy appears fragile.
As China continues to adapt in a shifting global trade landscape, its reliance on exports could become a double-edged sword, exposing the nation to potential global trade tensions. The upcoming year will be pivotal in determining the sustainability of China’s economic growth amidst these challenges.
