China hits 5.0% growth target as exports mask weak domestic demand

China’s economy expanded 5.0% in 2025, meeting Beijing’s announced goal and bringing gross domestic product to 140.1879 trillion yuan, roughly $20.01 trillion, official data released by the National Bureau of Statistics (NBS) showed. The headline result reflected a clear imbalance: strong external demand and a manufacturing upswing offset a persistent domestic demand shortfall.

Growth decelerated toward year end. Fourth‑quarter GDP rose 4.5% year‑on‑year, with quarter‑on‑quarter expansion of 1.2% in October–December, the slowest quarterly pace since late 2022 when China began easing its COVID controls. NBS officials framed the outcome as evidence of "remarkable stability" amid external and domestic headwinds; NBS chief Kang Yi said the result was achieved despite a "complex and severe situation marked by rapid changes in the external environment and mounting domestic challenges," adding that China had "withstood pressure and maintained steady progress, achieving new results in high-quality development."

Exports were the principal engine. The value of exports rose 6.1% for the year to 26,989 billion yuan, about $3.9 trillion, contributing to a record trade surplus near $1.2 trillion. Industrial production also outperformed, with value‑added industrial output up 5.9% year‑on‑year and December industrial output rising 5.2%. Manufacturing showed particular strength: equipment and high‑technology manufacturing each recorded growth above 9%, and firms in industrial robotics, 3D‑printing equipment and new energy vehicles led the gains. The official manufacturing PMI moved back into expansion territory in December, suggesting improving industrial sentiment at year‑end.

That supply‑side strength, however, contrasted with weak consumption and a deep property slump. Nationwide retail sales of consumer goods rose just 3.7% in 2025, while December retail sales increased only 0.9% year‑on‑year, the slowest December rise since the end of zero‑COVID restrictions. Fixed‑asset investment fell 3.8% for the year; infrastructure spending declined 2.2% and real‑estate development spending plunged 17.2%, underscoring the property sector’s drag. The NBS highlighted a "contradiction of strong supply and weak demand" and warned of "numerous longstanding issues and new challenges" for growth.

Household finances showed modest nominal gains: per‑capita disposable income rose 5.0% to 43,377 yuan. Demographic pressures remain acute, with the crude birth rate falling to about 5.63 births per 1,000 people in 2025, continuing a longer‑term downtrend that weighs on consumption and the labor force.

Markets and analysts reacted with mixed assessments. Private economists hailed the target accomplishment, Lynn Song, chief economist for Greater China, said "mission accomplished for 2025", but some external analysts remain skeptical about the headline pace. The Rhodium Group estimates a substantially lower growth rate for 2025 in the 2.5%–3.0% range, and major banks forecast a slowdown in 2026, with Deutsche Bank projecting around 4.5%.

With the 14th Five‑Year Plan period closing, policymakers face a strategic choice: rely on external demand and advanced manufacturing to sustain growth, or pivot to stronger fiscal and structural measures to revive consumption and stabilize the property market. The 2026 GDP target and the policy mix that follows will be closely watched as authorities weigh short‑term support against longer‑term reforms needed to rebalance demand and lift trend growth.