China’s economy likely grew last year at its weakest rate in three decades, outside of the pandemic, according to an AFP survey of analysts ahead of official data on Monday.<\/p>\n
The world’s second-largest economy struggled to shore up its property market while boosting domestic consumption as Chinese exports to the key US market were crimped by Donald Trump’s tariffs.<\/p>\n
President Xi Jinping said last month that growth probably met an annual target of “around five percent” in 2025.<\/p>\n
Economists estimated a median figure of 4.9 percent, in what would be the weakest growth since 1990 when China was under Western sanctions after the deadly Tiananmen Square crackdown.<\/p>\n
The announcement will be “close enough for officials to declare victory” in meeting the roughly five-percent number, a “political comfort blanket” for Beijing, said Sarah Tan of Moody’s Analytics.<\/p>\n
But the composition of Chinese growth was “deeply uneven” and official figures “mask the weak sentiment on the ground”, she said.<\/p>\n
Analysts agreed the main problem was China’s property sector, which has failed to overcome a persistent debt crisis despite rate cuts and loosened restrictions on homebuying.<\/p>\n
House prices have risen slightly in some large cities but the broader market remains sluggish.<\/p>\n
“We see no sign of a near-term property sector bottoming out,” analysts from Goldman Sachs said.<\/p>\n
Without bolder measures like converting housing stock into affordable homes, the industry will remain unstable, analysts warned.<\/p>\n
Waning investments<\/p>\n
Investments in property and infrastructure likely took a hit last year.<\/p>\n
Official figures already show that fixed-asset investment slowed 2.6 percent between January and November, its sharpest rate since 2020.<\/p>\n
Larry Hu and Yuxiao Zhang of Macquarie Group attributed the decline to unannounced “data revisions” by Beijing, adding they did not expect policymakers to respond.<\/p>\n
Property investment could fall by 12 percent in 2026, they predicted.<\/p>\n
Tianchen Xu of the Economist Intelligence Unit (EIU) also forecast a real-estate “correction” in 2026, adding: “This will remain a drag on growth.”<\/p>\n
Meanwhile, constraints on local government finances pushed a wider slowdown in manufacturing and infrastructure investment last year, Goldman Sachs analysts said.<\/p>\n
China’s outbound foreign direct investment continued to outpace inbound flows in recent quarters, they noted.<\/p>\n
Too anxious to spend<\/p>\n
Domestic spending is also cause for concern. Retail sales, a key indicator of consumption, grew at their slowest pace in nearly three years in November.<\/p>\n
Economists have long urged Beijing to move towards a growth model powered by consumption rather than exports and manufacturing.<\/p>\n
Excess supply remains an issue in manufacturing despite a government campaign last year to combat overcapacity and price cutting.<\/p>\n
China aims to become a global powerhouse in advanced manufacturing, but that promises little for domestic spending, according to Goldman Sachs analysts.<\/p>\n
“High-end manufacturing and frontier technology will not generate many jobs or lead to significantly higher incomes for average households, making only a limited contribution to private consumption,” they said.<\/p>\n
Chinese consumers remain jittery about the wider economy and high unemployment, even though officials have relaxed fiscal policy and subsidised the replacement of household items in a sputtering bid to boost spending.<\/p>\n
“That anxiety is shaping how households spend,” Tan said, noting that while domestic tourism rebounded to pre-pandemic levels last year, the average outlay per traveller was lower.<\/p>\n
Minimal US impact<\/p>\n
Robust exports have been a bright spot in the cloudy economic picture despite a bruising trade war with the United States that saw Trump slap steep tariffs on Chinese products.<\/p>\n
Official data showed Chinese exports to the United States plunged by 20 percent in 2025, but that had little impact on demand for Chinese products elsewhere.<\/p>\n
China’s trade surplus hit a record $1.2 trillion last year, with officials lauding a “new historical high” filled by other trade partners.<\/p>\n
“The trade war 2.0 didn’t impact China much, leading Beijing to refrain from implementing major stimulus measures,” said Hu and Zhang of Macquarie.<\/p>\n
Tan agreed that “exports are propping up the economy while consumers and property developers hang back”.<\/p>\n
But whether they continue to drive the economy in 2026 remains to be seen.<\/p>\n
Economists expect Beijing to reveal new stimulus measures — potentially at its annual parliamentary session in March — to address core challenges.<\/p>\n
“We think there will be a turnaround this year driven by policy support from fiscal and new financing policy tools,” said Erin Xin at HSBC.<\/p>\n
Xu, of the EIU, predicated that fiscal policy would be “expansionary by historical standards” for China to reach its growth target.<\/p>\n
Macquarie analysts, however, were more conservative, saying “the size of the stimulus package will largely depend on the magnitude of the export slowdown”.<\/p>\n","protected":false},"excerpt":{"rendered":"China’s economy likely grew last year at its weakest rate in three decades, outside of the pandemic, according…\n","protected":false},"author":2,"featured_media":236564,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":{"0":"post-236563","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-new-zealand","11":"tag-newzealand","12":"tag-nz"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/236563","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=236563"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/236563\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/236564"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=236563"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=236563"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=236563"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}