China's Economic Growth Slows in Fourth Quarter of 2025
China's economy experienced a deceleration in growth during the final quarter of 2025, as indicated by new data from the country's National Bureau of Statistics. The gross domestic product (GDP) expanded by 4.5% year-on-year in the fourth quarter, marking the slowest pace since China emerged from its pandemic-related lockdowns approximately three years ago.
In comparison, the previous three quarters of 2025 recorded higher growth rates, with the economy expanding by 5.4%, 5.2%, and 4.8% respectively. Despite this slowdown, China achieved an overall annual GDP growth rate of 5.0% for 2025, aligning with the government's official target for the year.
The primary driver behind this growth has been the country's robust export sector. Chinese enterprises managed to maintain strong overseas sales, even in the face of persistent trade tensions with the United States and emerging uncertainties in international trade policy. The resilience of exports has helped to offset some domestic economic pressures.
However, economists have pointed to several imbalances within China's economic landscape. While foreign demand continues to support the economy, internal challenges have become more pronounced. Consumer spending has been subdued due to weak domestic demand, a tight labor market, and declining property values, which collectively influence consumer confidence and spending power.
Additionally, the financial health of many local governments remains a concern. Elevated debt levels have limited their ability to implement large-scale fiscal stimulus measures, potentially constraining options for future economic support if needed. The property sector, once a key pillar of China's growth, continues to struggle, with falling real estate prices affecting both developers and homeowners.
Looking ahead, most economic forecasts suggest that China is likely to maintain a similar growth trajectory in the near term. Global financial institutions have released their projections for 2026: The World Bank anticipates growth of approximately 4.4%, while the International Monetary Fund expects a 4.5% increase. Analysts at Goldman Sachs have offered a slightly more optimistic outlook, forecasting growth of 4.8% for the coming year.
External demand is expected to remain a significant contributor to growth, though the domestic sector's ability to recover will be closely monitored. The government's approach to managing local government debt, supporting employment, and stabilizing the property market will be critical factors influencing economic prospects in 2026.
In summary, while China has met its annual growth target for 2025, the recent slowdown highlights underlying challenges within the country's economic structure. Maintaining momentum will require addressing domestic weaknesses and navigating external risks, as policymakers seek to sustain stable growth in the world's second-largest economy.