Despite the ongoing export boom
China’s economy is growing at its slowest pace in a long time
China’s economy grew at its slowest pace in three years in the fourth quarter. Economists attribute this to weak domestic demand – exports remain the most important pillar.
China’s economy grew significantly more slowly at the end of the year. As the statistics office in Beijing announced, the gross domestic product (GDP) increased by 4.5 percent in the fourth quarter of 2025 compared to the same period last year.
The world’s second-largest economy thus recorded its weakest quarterly growth since the end of the strict Corona lockdowns around three years ago. In the three previous quarters, growth was even higher: 5.4 percent, 5.2 percent and 4.8 percent.
China’s economy with a perfect landing
For the year as a whole, the statisticians still reported an increase of 5.0 percent. The target of “around five percent” set by the Chinese government was therefore exactly achieved. At the same time, it is one of the lowest annual growth rates in decades.
Economists see the cause primarily in weak domestic demand: a tight labor market and falling real estate prices are dampening consumers’ purchasing mood. According to the National Statistics Office, retail sales rose just 0.9 percent year-on-year in December – the slowest growth since coronavirus restrictions were lifted.
Correction after real estate boom
The slowdown is also evident in investments. Investments in property, plant and equipment fell by 3.8 percent in 2025 compared to the previous year. The decline was particularly significant in the real estate sector: real estate investments fell by 17.2 percent.
Industrial production increased by 5.2 percent in December, but remained below the previous year’s growth of 5.8 percent.
Continued export boom despite trade dispute
The economy continued to be supported by foreign trade. Despite ongoing tensions with the USA and new trade policy uncertainties, Beijing last week announced a record trade surplus of $1.2 trillion for 2025.
The trade dispute with Washington led to a significant slump in exports to the USA by 20 percent and a decline in imports from the United States by 14.6 percent. However, other sales markets were able to more than compensate for these losses.
Reserved ones Growth forecasts
International organizations expect a further weakening in the coming years. The World Bank expects growth of around 4.4 percent for 2026, the International Monetary Fund expects around 4.5 percent. The US investment bank Goldman Sachs is somewhat more optimistic with a forecast of 4.8 percent, but also points out that robust exports are likely to remain the most important support.
At the same time, Goldman warns of ongoing structural problems. Building a consumption and services-driven economy will “take years, if not decades,” wrote China’s chief economist Hui Shan in a recent analysis. In addition, the real estate sector has not yet reached a low point, and a weak labor market continues to dampen households’ purchasing mood.
Demographic crisis as Load factor
Demographic developments create additional pressure. According to official data, China’s population fell by 3.39 million to 1.405 billion people in 2025. This is the fourth year in a row that the population has shrunk, although the decline has accelerated. Births fell to a low of 7.92 million while deaths rose to 11.31 million.
This development complicates Beijing’s plans to boost domestic consumption. The impending loss of hundreds of millions of workers also puts already strained pension funds under further pressure.
