China Hits 5% Growth Target as Trade Surplus Masks Slowing Economy and Demographic Strains

By Blessing Nweke

China said its economy expanded by 5% in 2025, meeting the government’s annual growth target as a record trade surplus helped offset weaknesses at home. However, official data also showed that momentum slowed sharply toward the end of the year, with growth easing to 4.5% in the final three months compared with a year earlier.

Beijing had set a goal of “around 5%” growth despite ongoing challenges, including weak domestic demand, a prolonged property crisis and uncertainty caused by tariff policies under US President Donald Trump. While the headline figure matched the target, several analysts questioned whether the official numbers fully reflect economic conditions.

“While the headline GDP print came in at 5% for 2025, matching the government’s target, we think growth is weaker than official figures suggest,” said Zichun Huang, China economist at Capital Economics. She added that independent estimates indicate the pace of expansion may be overstated by at least 1.5 percentage points.

The growth data came alongside fresh signs of demographic stress. China recorded just 7.9 million births in 2025, the lowest number since records began in 1949, according to the National Bureau of Statistics. The population fell for a fourth consecutive year, declining by 3.4 million to about 1.4 billion, highlighting a deepening demographic crisis despite government incentives to encourage larger families.

Exports continued to underpin growth, with China reporting the world’s largest-ever trade surplus of $1.19tn last week, driven by stronger shipments to markets outside the US. Kang Yi, head of the statistics bureau, said the economy faces “strong supply and weak demand” but can maintain stable growth this year.

Still, reliance on exports may be tested as tariff risks persist. At home, falling house prices, down 2.7% in December, weak retail sales growth of 0.9% and a 17.2% drop in property investment underscore the challenges facing policymakers as they pledge more proactive fiscal support in 2026.