China Hits Growth Goal with Export Resilience Against US Tariffs
China reported a remarkable growth achievement last year, despite significant challenges.
– The economy expanded by 5%, successfully meeting Beijing’s official target, largely fueled by a record trade surplus.
– In contrast, growth slowed to 4.5% in the final quarter of 2025.
– Key factors affecting the economy included difficulties in boosting domestic spending, an ongoing property crisis, and the repercussions of US tariffs initiated under President Donald Trump.
The Resilient Sector: Exports and Trade Surplus
Experts underscore the contrasting dynamics within the economy, describing it as a two-speed economy. Here’s a deeper look:
– Manufacturing and export performance have significantly contributed to growth, while domestic consumption remains tepid.
– Some analysts express skepticism regarding the accuracy of reported figures. Zichun Huang, a China economist at Capital Economics, believes the real growth rate might be overstated by at least 1.5 percentage points.
– In a prevailing trend, the number of births in China hit its lowest point since records began in 1949, plummeting to 7.9 million in 2025.
Demographic Challenges and Economic Implications
– This decline in the birth rate could intensify existing domestic challenges by weakening demand for housing and consumer products, further stressing the struggling property market.
– Notably, China’s population decreased for the fourth consecutive year, falling by 3.4 million to a total of 1.4 billion.
– The demographic crisis prompts the government to implement measures aimed at encouraging couples to have more children.
The Impact of Trade Relations
Last week, China reported the largest trade surplus in history—a staggering $1.19 trillion (£890 billion)—driven by surging exports to markets beyond the US.
– Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, warned that while pushing growth via exports is beneficial short-term, it can undermine profits and long-term sustainability.
– Kang Yi, head of China’s National Bureau of Statistics, acknowledged the economy’s challenges, emphasizing the need for balanced growth momentum amid persistent supply-demand discrepancies.
Property Market Concerns
China’s ongoing property slump starkly illustrates its domestic economic hurdles:
– Recent data indicates a 2.7% drop in house prices in December compared to the previous year—the steepest decline in five months.
– Property investment declined by 17.2% last year, significantly affecting construction, household wealth, and local government finances.
– With many households left with partially completed homes, confidence in real estate as a secure investment has taken a hit.
Moreover, the rise in retail sales was only 0.9% in December, marking the slowest growth rate in three years, even as factory output improved to 5.2%—above November’s 4.8%.
Conclusion: The Path Forward
While China has achieved its growth goal, the challenges ahead are multifaceted. Policymakers are expected to pursue proactive strategies to bolster consumer and business confidence amid a delicate balancing act of stimulating growth without incurring excessive debt.
Understanding these dynamics is crucial as China navigates the complexities of a transforming global economic landscape and addresses the pressing needs within its own borders. The interplay between exports and domestic consumption will be vital for sustainable growth as trade tensions continue to shape the environment.