China Q4 GDP slows to three-year low despite hitting 2025 growth target

Summary:

• Q4 GDP slows to 4.5% y/y, weakest in three years

• Full-year 2025 growth hits 5.0% target

• Export strength offsets weak domestic demand

• Property slump and deflation drag on confidence

• Structural imbalances remain key risk

China met its 2025 growth target, but a sharp Q4 slowdown highlights rising dependence on exports amid weak domestic demand.

China’s economic growth slowed to its weakest pace in three years in the final quarter of 2025, highlighting mounting strains from soft domestic demand even as strong exports allowed the economy to meet the government’s full-year growth target, Reuters reported.

Data released Monday by the National Bureau of Statistics showed gross domestic product expanded 4.5% year-on-year in Q4, down from 4.8% in the previous quarter. The outcome was marginally above market expectations but marked the slowest quarterly pace since the post-pandemic reopening period.

On a quarterly basis, output rose 1.2% in October–December, exceeding forecasts for a 1.0% increase and edging above the prior quarter’s 1.1% gain. Even so, economists say momentum remains fragile as consumer confidence and private investment continue to lag.

For 2025 as a whole, China’s economy grew 5.0%, matching Beijing’s official target of “around 5%” and slightly outperforming market expectations. The result reflects resilience in the face of external headwinds, aided by exporters’ success in diversifying away from the United States and by tariff increases that proved less severe than initially feared.

China’s manufacturing and export engine remained the key growth driver. The country last week reported a record trade surplus of nearly US$1.2 trillion in 2025, underpinned by robust shipments to emerging markets and Europe. That export strength enabled policymakers to limit stimulus to targeted measures rather than broad-based easing.

However, the heavy reliance on external demand underscores persistent vulnerabilities. Domestic consumption and investment weakened further late last year, weighed down by a prolonged property downturn, falling home prices and entrenched deflationary pressures. Analysts warn that without a sustained recovery in household confidence, growth risks becoming increasingly unbalanced.

Structural challenges remain a central concern for policymakers. While export-led resilience has bought time, economists caution that weak domestic demand, excess capacity and property sector stress pose longer-term risks to China’s growth trajectory heading into 2026.

This article was written by Eamonn Sheridan at investinglive.com.