China’s economy expanded at a five per cent annual pace in 2025, buoyed by strong exports despite US President Donald Trump’s tariffs.
However, growth slowed to a 4.5 per cent rate in the last quarter of the year, the government said on Monday.
That was the slowest quarterly growth since late 2022, during the COVID-19 pandemic. The economy, the world’s second largest, grew at a 4.8 per cent annual pace in the previous quarter.
China’s leaders have been trying to spur faster growth after a slump in the property market and disruptions from the pandemic rippled through the economy.
As expected, annual growth last year was in line with the government’s official target for an expansion of “about five per cent.”
Strong exports helped to compensate for weak consumer spending and business investment, contributing to a record trade surplus of $US1.2 trillion ($A1.8 trillion).
“The key question is how long this engine of growth can remain the primary driver,” Lynn Song, chief economist for Greater China at Dutch bank ING wrote in a recent note.
Chinese exports to the US suffered after President Donald Trump returned to office early last year and began raising tariffs.
But that decline was offset by shipments to the rest of the world. Soaring imports of Chinese goods are leading some other governments to take action to protect local industries, in some cases raising import duties.
“Should more economies also start ramping up tariffs on China, as Mexico has done and the EU has threatened to do, eventually, a tighter squeeze will be seen,” said Song.
China’s leaders have repeatedly highlighted boosting domestic demand as a policy focus, but their effects have so far been limited. A trade-in program for drivers to replace older cars with more energy-efficient models, for example, has been losing steam in recent months.
“Stabilisation, not necessarily recovery, of the domestic property market is key to revive public confidence and, hence household consumption and private investment growth,” said Chi Lo, senior market strategist for Asia Pacific at BNP Paribas Asset Management.
China has also provided trade-in subsidies for home appliances such as refrigerators, washing machines and TVs. While major consumer stimulus policies in 2025 – including such subsidies – are set to continue in 2026, they may be scaled back, Weiheng Chen, global investment strategist at J.P. Morgan Private Bank, said in a recent note.
Investments in artificial intelligence and other advanced technologies remain a key priority for China’s ruling Communist Party as it moves to boost self-reliance and rival the US.
Many ordinary Chinese and small businesses are struggling with tough times and troubling uncertainty over jobs and incomes.
Some economists and analysts believe China’s actual economic growth in 2025 was slower than official data suggest. The Rhodium Group, a think tank, said last month it expected China’s economy to grow only by 2.5 per cent to three per cent last year.
The Chinese economy expanded at a five per cent annual rate in 2024, and 5.2 per cent in 2023, according to government data. Ambitious official growth targets have also trended down over the past few years, from six per cent to 6.5 per cent in 2019 to “around five per cent” in 2025.
A slower annual expansion is expected for 2026. Deutsche Bank forecasts that China’s economy will grow about 4.5 per cent in 2026.
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