China’s 4th-Quarter Economic Growth in 2025 Hits Weakest Pace in Nearly 3 Years

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Jan 20, 2026 - 11:00 Updated: Jan 20, 2026 - 01:11
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China’s 4th-Quarter Economic Growth in 2025 Hits Weakest Pace in Nearly 3 Years

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China’s economy grew at its weakest rate in nearly three years in the fourth quarter last year, as a tumbling property sector remained a drag on the world’s second-largest economy amid weakening consumption and investment.

China’s economy expanded by 4.5 percent in the final quarter of 2025 from the same period last year, according to the regime’s National Statistics Bureau data published on Monday. That represented the worst reading since Beijing abandoned its draconian COVID-19 lockdown strategy in late 2022.

For the full year, the bureau said the gross domestic product (GDP) grew by 5 percent.

Beijing had set a target of “about 5 percent” for 2025 about a year ago.
Although the full-year growth was in line with the official target, “we estimate that the actual pace of economic expansion was at least [1.5 percentage points] weaker,” Zichun Huang, China economist at Capital Economics, said in a Jan. 19 note.

Separate December data showed the economy further lost momentum. Domestic spending was worse than expected, while investment remained sluggish.

Retail sales, a measure of consumer spending, rose by 0.9 percent year on year in December, slowing from 1.3 percent growth recorded in November and marking the weakest growth in three years. Economists polled by Reuters had expected a 1.2 percent increase.

Fixed-asset investment (FAI)—which measures long-term capital spending on physical assets such as land, ports, rail, and factories—shrank by 3.8 percent for the full year in 2025. The regime’s statistics bureau doesn’t release single-month FAI data, but the year-to-date reading already pointed to a sharp decline: In 2024, the FAI expanded by 3.2 percent. That is also the first time in nearly 30 years that the annual FAI has fallen into the red.

In contrast, factory output continues to expand amid strong exports. Industrial production grew by 5.2 percent from a year earlier, accelerating from a 4.8 percent increase recorded in November and beating economists’ forecasts of a 5 percent growth.

The engine of the country’s economy now lies in exports. For the full year of 2025, net exports of goods and services contributed 32.7 percent to China’s economic growth, Kang Yi, head of the National Bureau of Statistics, said at a briefing in Beijing after releasing the economic figures.

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Buildings are seen under construction in Hangzhou, eastern Zhejiang province, China, on Sept. 15, 2025. AFP via Getty Images
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Shipments to the key U.S. market recorded double-digit declines for nine straight months last year due to additional tariffs imposed by the Trump administration aimed at curbing the deadly flow of fentanyl and rebalancing trade, among other reasons.
China could now face an additional 25 percent U.S. tariff, following President Donald Trump’s recent threats to impose extra duties on all countries doing business with Iran, of which China is the largest trading partner and oil purchaser.

As domestic demand remains sluggish, Chinese exporters have sought to divert an influx of goods facing levies in the United States to other overseas markets, such as Africa and the European Union.

As a result, China’s customs administration last week reported that the country accumulated its largest-ever trade surplus of nearly $1.2 trillion in 2025.

“It’s hard to imagine how the trade surplus could continue to expand at this clip indefinitely into the future, if only because that would incur a wider protectionist backlash abroad,” Christopher Beddor, economist at Gavekal Dragonomics, said on Monday.

Foreign governments and global organizations such as the International Monetary Fund have encouraged Beijing to reduce its reliance on debt-driven exports and shift to a consumption-led model.

Chinese authorities have also repeatedly pledged to prioritize boosting domestic consumption and, so far, have rolled out related policies, including a consumer goods subsidy scheme and welfare measures such as child care or tuition support.

Still, some analysts were not optimistic about their effects amid a prolonged slump in the property sector.
“Unless policy pivots more decisively towards households and consumption, growth is likely in the low-4s to mid-4s” in 2026, said Charu Chanana, chief investment strategist at Saxo in Singapore.

Persistent Housing Crisis

The latest data released on Monday pointed to a sustained downturn in the property market. Last month, of the 70 cities tracked by the statistics bureau, 58 reported a year-on-year decline in home prices, while only six cities saw gains.

On an annual basis, prices dropped by 2.7 percent in December, quickening from a 2.4 percent fall in the previous month and marking the fastest decline in five months.

For the full year, property investment slumped by 17.2 percent, worsening from a 10.6 percent decline recorded in 2024.

“The continued weakness in the property sector is broadly in line with our expectations and is likely to remain a major drag on China’s growth over the next two to three years,” said Jeff Zhang, an equity analyst at Morningstar.

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People walk past a screen showing figures of the gross domestic product (GDP) on a street in Shanghai on Jan. 19, 2026. Jade Gao/AFP via Getty Images
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China’s official statistics have long faced questions over their veracity, partly because of the ruling Communist Party’s record of concealing data deemed harmful to its image. Other incentives to manipulate data include local officials’ pursuit of promotion, as economic figures remain a key measurement of their performance.

One of the latest consultancy firms to question the very size of China’s economy was Rhodium Group, which estimated that the country’s growth was overstated by at least two-thirds.

In its annual analysis of China’s economy, researchers at Rhodium Group said they believe China’s real GDP growth was between 2.5 percent and 3 percent, citing a collapse in fixed-asset investment.
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“History offers no examples of economies that have recorded 5 percent real GDP growth while facing years of persistent deflation, as China has for ten consecutive quarters,” the researchers wrote in their December report. “We doubt China is the first.”
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Reuters contributed to this report. 
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