China's GDP slowdown exposes weakness in domestic consumption.
- China's GDP grew less in the fourth quarter.
- Domestic consumption falls short of forecasts.
- Exports continue to support the Chinese economy.
The growth rate of the economy of China Strength in the fourth quarter of 2025, reflecting the persistent weakness in domestic consumption and the continued contraction in investment. According to official data released this week, Gross Domestic Product advanced 4,5% in the period between October and December, marking the weakest quarterly performance since the beginning of 2023.
The result represented a slowdown compared to the 4,8% rate recorded in the previous quarter. Even so, year-to-date growth reached 5%, aligning with the target set by the Chinese government, despite a challenging economic environment marked by difficulties in the real estate sector and external pressures stemming from trade disputes with the United States.
December's figures revealed uneven performance among the main drivers of the economy. Retail sales, the main indicator of household consumption, advanced only 0,9% year-on-year, falling short of market projections. This data signals consumer caution, influenced by pressured incomes, lower confidence, and the prolonged impact of the housing crisis.
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In contrast, industrial production showed significant improvement. The 5,2% growth exceeded estimates and indicated a gradual recovery in the manufacturing sector, driven mainly by external orders. Even with this progress, investment in fixed assets fell by 3,8% throughout 2025, highlighting the country's difficulty in reactivating long-term projects, especially in the real estate segment.
Stronger export performance has been key to offsetting domestic weakness. China recorded a record trade surplus of nearly US$1,2 trillion, a result of increased sales to markets outside the US. According to Tommy Xie, an executive at... OCBC BankThe negative effects of currency appreciation and stricter controls were limited, and moderate export growth is expected in 2026.
Analysts warn that excessive dependence on the external sector creates structural imbalances. According to Eswar Prasad, from Cornell UniversityThe combination of weakened investment and slow domestic consumption makes the current economic model unsustainable in the medium term.
Against this backdrop, the People's Bank of China The company announced recent measures to stimulate credit, including interest rate cuts and expanded financing programs for strategic sectors. Economists from Goldman Sachs They believe that new monetary measures should be implemented in the coming months to try to revive domestic demand and alleviate the deflationary pressures that still persist.
