Key Points
- China’s Q4 GDP rose 4.5% year-on-year, slightly above forecasts but slowing from the previous quarter.
- Full-year growth for 2025 hit about 5.0%, meeting Beijing’s target largely on export strength.
- Weak domestic consumption and investment underscore structural challenges facing the Chinese economy.
China’s economy grew 4.5% in the fourth quarter of 2025, slightly above market expectations and marking the slowest pace in three years, official data showed on Monday. The year-end quarterly figure edged past analysts’ forecasts of around 4.4%, but it also reflected a further deceleration from the prior quarter’s 4.8% pace as domestic demand softened amid weak consumption and investment trends.
The performance comes as Beijing reported that full-year GDP expanded roughly 5.0%, hitting the government’s official target for 2025 after a year of export strength and diversified global trade. Export-oriented sectors helped offset internal economic frictions, even as retail sales and private investment lagged and the property sector remained under pressure.
National Bureau of Statistics data showed that although industrial production and merchandise exports remained resilient, fixed-asset investment fell, and retail sales underperformed forecasts, highlighting the uneven nature of China’s recovery. The fourth-quarter slowdown underscores persistent structural imbalances between supply and demand that policymakers have struggled to address.
Analysts said the marginally stronger-than-expected GDP print may offer some relief to markets, but the broader trend of slowing momentum points to challenges in sustaining robust growth beyond external demand. Domestic consumption, which plays a crucial role in long-term stability, remained subdued, reflecting cautious household spending in the face of economic uncertainty.
Officials have noted that while external trade continues to support the economy, reliance on exports may be unsustainable without stronger domestic drivers. Investment growth also faltered, with fixed-asset investment contracting and private firms reluctant to increase capital expenditures amid subdued local demand.
Despite these headwinds, China’s economy showed resilience through 2025, aided by smaller-than-expected tariff impacts from the United States and exporters’ diversification into non-U.S. markets. This helped the country maintain unemployment stability and avoid sharper downturns, though economists warn growth could remain in the mid-4% range in 2026 absent stronger policy measures to stimulate consumption.
Financial markets responded cautiously to the data, with some Asian stock indexes recovering early losses as investors weighed the slower domestic growth against the still-solid external trade backdrop and Beijing’s pledges to support economic stability.
Looking ahead, economists expect policymakers to continue targeted stimulus and structural reforms, focusing on household income support and consumer confidence to rebalance growth sources. Achieving sustainable expansion will likely require policies that boost spending and address property market challenges while maintaining export competitiveness.
