China’s economy slowed at the end of 2025, reinforcing concerns that headline growth masks deepening domestic weakness. GDP expanded 4.5% yoy in Q4, down from 4.8% in Q3, in line with expectations. For the full year, growth reached 5.0%, matching the government’s target, but momentum clearly faded as the year closed.
Officials were quick to acknowledge the strain. Kang Yi, head of the National Bureau of Statistics, described 2025’s performance as “hard-won,” citing persistent challenges from strong supply and weak demand—a combination that continues to weigh on private confidence.
Full-year investment data underscored the depth of the slowdown. Fixed asset investment fell -3.8% ytd yoy, marking the first full-year contraction since the 1990s. The property sector remained the biggest drag, with property investment plunging -17.2% and new construction starts down -20.4%, extending a downturn now in its fourth year. Private investment dropped -6.4%, reflecting weak profit incentives amid overcapacity and cautious households.
December activity data showed mixed signals. Industrial production rose 5.2% yoy, improving from November and beating expectations of 5.0%. But retail sales slowed to 0.9% yoy, missing 1.2% forecasts and reinforcing the message that consumption remains the economy’s main weak spot.
The Q4 slowdown increases pressure on Beijing to step up stimulus in 2026 to meet a growth target of 4.5–5.0%. Without a more decisive pivot toward households and consumption, growth is likely to settle in the low- to mid-4% range, forcing policymakers to confront one of the most persistent domestic demand slumps in decades.
