China has said its economy grew 5% last year, hitting Beijing\u2019s official target as the world\u2019s second-largest economy overcame Donald Trump\u2019s tariff war with a record trade surplus.<\/p>\n
Data released on Monday by Beijing\u2019s National Bureau of Statistics showed the Chinese economy hit the official target of \u201caround\u201d 5% \u2013 the same growth as in 2024<\/a> \u2013 despite a slowdown to 4.5% in the final three months of the year.<\/p>\n The quarterly figure eased from 4.8% growth in the third quarter and was the weakest quarterly figure since early 2023, when the economy also grew at 4.5%.<\/p>\n Experts had expected punitive US tariffs and the continuing property crisis would deliver a big blow to China\u2019s economic performance in 2025.<\/p>\n Instead, the country defied expectations by recording its largest-ever trade surplus<\/a> ($1.2tn) as it found alternative markets for its products and US tariffs proved less punitive than originally threatened.<\/p>\n The Commonwealth Bank of Australia\u2019s chief economist, Luke Yeaman, said navigating a fraught geopolitical landscape remained a \u201cmajor wildcard\u201d, but that China\u2019s economy should continue to grow through 2026.<\/p>\n At the same time, Yeaman warned that \u201cthe structural challenges plaguing China\u2019s domestic economy are not going away\u201d.<\/p>\n Among thoseis a four-year housing market meltdown that has left Chinese homeowners depressed and unwilling to spend.<\/p>\n Home prices have plunged by more than 20% since their peaks in 2021, which alongside the blow to consumer confidence has left a looming debt crisis in the property sector that casts a pall over economic prospects.<\/p>\n While much of the developed world fights to contain inflation, China has battled deflation in recent years, with consumer prices climbing by just 0.8% in 2025.<\/p>\n Yeaman said Japan in the 1990s and early 2000s set a gloomy precedent. \u201cEven without a banking collapse, property busts can suppress growth for years,\u201d he said.<\/p>\n The head of China\u2019s National Bureau of Statistics, Kang Yi, said on Monday that while the world\u2019s second-largest economy \u201cfaces problems and challenges\u201d, it would \u201cmaintain stable, sound growth momentum this year\u201d.<\/p>\n However, the latest figures masked a slowdown in late 2025, with output in the December quarter only 4.5% higher than a year earlier.<\/p>\n Among structural woes is the four-year housing market meltdown. Home prices have plunged by more than 20% since their peaks in 2021. Photograph: Costfoto\/NurPhoto\/REX\/Shutterstock<\/p>\n Citi analysts describe a \u201cK-shaped\u201d economy of contrasting fortunes, as retail sales disappointed in December, even as exports and manufacturing climbed again and underpinned overall growth.<\/p>\n Further complicating the picture is that experts have long warned that official statistics are not reliable, with Capital Economics<\/a> estimating that the latest growth numbers could be inflated by as much as 1.5 percentage points, bringing growth down to about 3.5%.<\/p>\n China\u2019s leaders have vowed to \u201csignificantly\u201d lift household consumption as a share of the economy over the coming five years. Household spending accounts for under 40% of annual economic output, unusual for a country of China\u2019s income level and against a global average of 60%.<\/p>\n As part of efforts to boost the economy, last year the Chinese government provided 300bn yuan ($43bn) in subsidies to households that traded in old appliances for new ones.<\/p>\n While that scheme will be extended into this year, analysts at Moody\u2019s Analytics said the start of 2026 \u201cbrings a sense of deja vu to China\u2019s economic debate\u201d.<\/p>\n \u201cOnce again, officials are promising stronger support to lift confidence and stabilise growth. And once again, households and businesses are wondering whether action will match the rhetoric.\u201d<\/p>\n