China says its economy grew 5% last year, meeting Beijing’s official target as a record trade surplus boosted growth.
But Chinese government data shows economic growth slowed to 4.5% in the final three months of 2025 from a year earlier.
Despite struggles to boost domestic spending, a prolonged asset crisis and turmoil caused by US President Donald Trump’s tariff policies, Beijing had set a target of economic growth of “about 5%” in 2025.
Experts say the data points to a “two-speed economy”, with manufacturing and exports growing, while within the country, people are still spending cautiously and the property market remains a drag on the economy.
Even though China’s official data shows it has achieved its growth target, some analysts question the accuracy of the data given weak investment and consumer spending.
“While the title [gross domestic product] “While the print for 2025 came in at 5%, which matches the government’s target, we think growth is weaker than the official data suggests,” said Zichuan Huang, China economist at Capital Economics.
Huang said his company’s own calculations show that China’s official growth figures “overstate the pace of economic expansion by at least 1.5 percentage points”.
Also on Monday, Chinese data showed the country recorded the fewest number of births last year since records began in 1949.
Data from China’s National Bureau of Statistics show the total number of births is expected to decline to 7.9 million in 2025.
Economists say the falling birth rate will add to domestic challenges by weakening demand for housing and consumer goods, adding pressure to an already struggling property market.
The country’s population is expected to decline for the fourth consecutive year in 2025, from 3.4 million to 1.4 billion, officials said.
The figures highlight China’s deepening demographic crisis, even as the government tries to boost the birth rate by encouraging couples to have more children.
China last week reported the world’s largest-ever trade surplus – the value of goods and services sold abroad compared to its imports – of $1.19 trillion (£890 billion), driven by a surge in exports to markets outside the US.
Alicia Garcia-Herrero, chief economist for Asia Pacific at French bank Natixis, told the BBC, “China is effectively driving growth through loss-making exports, and that is not sustainable. Cutting prices may boost volumes, but it undermines profits and ultimately growth.”
Speaking on Monday, Kang Yi, head of China’s National Bureau of Statistics, said the country’s economy “is facing problems and challenges, including strong supply and weak demand”, but he added that it “will be able to maintain a stable, strong growth momentum this year.”
Analysts warn that increasing reliance on exports makes China more vulnerable to global trade tensions, especially as uncertainty grows over US tariff policy.
The US President recently threatened to impose new tariffs on countries that trade with Iran or oppose his plan to take control of Greenland.
China and other Asian countries buy oil from Iran.
China’s economic resilience could result in lower-than-expected US tariffs after Beijing and Washington agreed to a freeze, but these are set to expire in November 2026.
China’s domestic challenges are nowhere more evident than in its property sector.
Beijing has grappled with a long-term housing slump and rising local government debt, making businesses more hesitant to invest for expansion, and consumers more cautious about spending.
New data on Monday showed that house prices continued to fall in December, as the government struggled to stabilize China’s property market.
Prices fell 2.7% last month from a year earlier, the steepest decline in five months. Property investment also declined by 17.2% last year.
The prolonged property slump has had such a huge impact because the real estate industry once accounted for nearly a quarter of China’s economy, hitting construction activity, household wealth and local government finances.
Millions of families are left with unfurnished homes or assets that have lost significant value, eroding confidence in what was once seen as the safest place to park savings.
Declining land sales have also reduced local government revenues.
“China’s 5% GDP report is not surprising given the political incentives to ensure headline stability, but it clearly hides terrible investment data,” said Lewis Lu, head of Asia economics at Oxford Economics.
Retail sales rose just 0.9% in December, the slowest pace in three years, although factory output outpaced November’s 4.8% rise to 5.2%.
Once the 5% economic growth target was achieved, policymakers paused additional stimulus, effectively saving resources for this year, Natixis said in a note after the data was released.
The bank’s economists said the year-end slowdown in retail sales and investment reflected policy timing rather than a sudden downturn in the economy.
Chinese leaders have promised “proactive” policies this year as they seek to boost confidence between consumers and businesses. But the data shows the underlying economy remains fragile.
Beijing faces a delicate balancing act between reviving growth through stimulus while curbing rising debt and finding ways to avoid reliance on exports in an increasingly uncertain trade environment.