China Meets 5% Growth Target as Export Boom Offsets Tariffs, Domestic Weakness

China has met its official economic growth target for 2025, reporting annual growth of 5% as a surge in exports and a record trade surplus helped offset mounting domestic challenges and pressure from U.S. tariffs. The figures, released by China’s National Bureau of Statistics, mark a political win for Beijing, which had set a goal of “around 5%” growth despite weak consumer confidence, a prolonged property crisis and global trade uncertainty.

However, the data also revealed signs of strain beneath the headline number. Economic growth slowed to 4.5% in the final quarter of 2025 compared with a year earlier, highlighting what analysts describe as a “two-speed economy.” Manufacturing and exports continued to power growth, while domestic demand remained subdued, with cautious consumers and struggling property developers dragging on broader economic momentum.

China recorded the world’s largest-ever trade surplus last week at $1.19 trillion, driven by strong exports to markets outside the United States. Economists say exporters have been cutting prices to maintain volumes in the face of trade tensions, raising concerns about long-term sustainability. Analysts warn that relying heavily on exports leaves China vulnerable to future tariff shocks, particularly if U.S.-China trade frictions intensify after the current tariff pause expires in 2026.

Several economists have questioned the reliability of the official growth data. Capital Economics estimates that China’s true growth rate may be overstated by as much as 1.5 percentage points, citing weak investment and sluggish consumer spending. Retail sales grew just 0.9% in December, the slowest pace in three years, even as factory output accelerated.

China’s domestic pressures were further underscored by worsening demographic trends. Births fell to a record low of 7.9 million in 2025, and the population declined for a fourth consecutive year. Economists say this demographic downturn will deepen long-term challenges by reducing demand for housing and consumer goods, compounding the ongoing property slump.

The property sector remains one of the biggest drags on the economy. House prices fell 2.7% in December from a year earlier, while property investment dropped more than 17% over the year. Once accounting for roughly a quarter of China’s economic activity, the real estate downturn has eroded household wealth, hurt construction, and squeezed local government finances.

Officials insist the economy remains on stable footing, pledging proactive policies to boost confidence in 2026. But analysts say Beijing faces a delicate balancing act — reviving growth without fuelling debt, stabilising the property market, and reducing reliance on exports in an increasingly uncertain global trade environment.