China GDP Grows 4.8% in 2025, Missing Government's 5% Target

Full-Year Growth Falls Short

China's gross domestic product expanded 4.8% in 2025, the National Bureau of Statistics reported on January 25, missing the government's "approximately 5%" target set at the March National People's Congress. Fourth-quarter growth came in at 4.6% year-over-year, unchanged from Q3, as a late-year stimulus push failed to generate sufficient momentum.

In nominal terms, GDP growth was even weaker at 3.4%, reflecting persistent deflation in the GDP deflator. The gap between real and nominal growth — negative 1.4 percentage points — has raised concerns about a Japan-style balance-sheet recession.

Property Remains the Drag

Real estate investment declined 10.1% in 2025, the third consecutive annual contraction. New home sales by floor area fell 14.8%, while housing starts dropped 20.3%. Land sales revenue collected by local governments, a critical funding source for provincial finances, plummeted 22%.

"The property sector has moved from crisis to chronic contraction," said Andrew Batson, research director at Gavekal Dragonomics. "The adjustments needed — in terms of household expectations, developer balance sheets, and local government revenue models — will take years, not quarters."

Consumption Underwhelms

Retail sales grew 4.1% for the full year, below the 5.5% pace recorded in 2024. Consumer confidence, as measured by the central bank's quarterly survey, remained at its lowest level in the survey's 23-year history. Household savings deposits grew 10.8%, indicating that consumers continued to prioritize saving over spending.

Per-capita disposable income rose 4.6% in real terms, outpacing GDP growth, but the propensity to consume declined, with the household savings rate climbing to 34.2% from 33.1% in 2024.

Bright Spots: Exports and High-Tech Manufacturing

Exports grew 6.2% in dollar terms to $3.58 trillion, driven by electric vehicles, solar panels, batteries, and electronics. The "new three" industries — EVs, lithium batteries, and solar equipment — generated combined export revenue of $180 billion, up 28%.

High-tech manufacturing output grew 8.7%, with semiconductor equipment production rising 22% and industrial robot output increasing 12%. Fixed asset investment in manufacturing expanded 9.2%, reflecting the government's strategy of redirecting capital from property toward advanced industries.

Policy Outlook for 2026

Economists expect Beijing to set a "around 5%" growth target again for 2026, supported by a larger fiscal deficit and continued monetary easing. The State Council is reportedly preparing a stimulus package worth 3 trillion to 4 trillion yuan, focused on consumer subsidies, local government bailouts, and infrastructure spending.

The PBOC is expected to cut the medium-term lending facility rate by 20 to 30 basis points and reduce the RRR by another 50 to 100 basis points during the year, analysts at UBS projected.

Market Response

The CSI 300 index fell 0.8% on the data release, while the offshore yuan weakened to 7.18 per dollar. Copper futures fell 1.2%, reflecting concerns about China's construction-driven commodity demand.

The Central Economic Work Conference in December pledged to make 2026 a year of "more proactive fiscal policy and moderately loose monetary policy." Investors are watching the March NPC session for concrete details on the size and composition of the fiscal package.