Analysis Estimates China’s Actual 2025 Growth Fell Below Three Percent
Beijing, Tuesday, 23 December 2025.
Independent data suggests China’s economy grew just 2.5% to 3% in 2025—roughly half the official target—signaling a structural slowdown that could limit 2026 expansion to under 2%.
A Divergence in Data
The gap between official government statistics and independent market analysis has reached a critical juncture. While Beijing’s official data indicates the economy expanded by 5.2% through the third quarter of 2025, independent assessments released this week paint a far more somber picture [1][4]. According to the Rhodium Group, China’s actual GDP growth for the year sits between 2.5% and 3%, revealing a discrepancy of roughly half the pace implied by official figures [2][3]. This overstatement masks a shortfall in demand estimated at approximately $500 billion, a gap that largely stems from a severe contraction in the property and investment sectors [2][3]. The International Monetary Fund (IMF) has also flagged these persistent economic miscalculations, noting that such overstatements obscure global imbalances [1].
The Investment Implosion
The primary driver of this slowdown is a dramatic reversal in investment activity. Fixed-asset investment, which began 2025 with a promising 4.2% year-on-year increase in the first quarter, deteriorated rapidly as the year progressed, plunging to -12.2% by October [2][3]. In nominal terms, fixed-asset investment declined by 11% between July and November alone [1][4]. This collapse is particularly acute in the property sector, where investment, sales, and new starts have all fallen by more than 20% year-over-year, leaving new starts more than 75% below their peaks from early 2021 [1][4]. Manufacturing investment, often a reliable growth engine, has not been immune to this cooling trend; growth in this sector decelerated significantly, falling by 7.3 percentage points from 9.2% in 2024 to just 1.9% through November 2025 [1][4].
Systemic Malaise and Deflationary Pressure
Beyond the investment slump, the broader economy is grappling with entrenched deflation and weakening consumer confidence. China has now faced persistent deflation for ten consecutive quarters, a historical anomaly for an economy reporting growth above 5% [2][3]. Household behavior reflects this uncertainty; borrowing growth hit an all-time low of 1.1% in November 2025 [1][4]. Furthermore, retail sales momentum has evaporated, dropping from 6.4% year-over-year in May to just 1.3% in November, while e-commerce sales have contracted by 4.3% year-to-date [1][4]. Although Beijing unveiled a special consumption action plan in March 2025, it has yet to yield tangible results, and the aggregate consumer price index has remained flat for three years [1][4].
2026 Outlook and Global Trade Implications
Looking ahead, the forecast for 2026 remains constrained. Independent analysis suggests that without costly demand subsidies or major systemic reforms, GDP growth in 2026 may struggle to exceed 2%, with estimates ranging between 1% and 2.5% [1][2][3]. This stands in sharp contrast to the IMF’s forecast of 4.5% [2][3]. Consequently, exports remain the most critical variable for China’s economic performance in the coming year [1][5]. China’s trade surplus surged past the $1 trillion mark in the first 11 months of 2025, surpassing the total for all of 2024 [1][5]. However, this reliance on external demand faces growing headwinds. With direct exports to the United States declining by 20-30% year-over-year each month since April 2025, and the potential for increased protectionist measures from Europe and emerging markets, the path to export-led stability is narrowing [1][5].