China's economy slows to 4.2% growth as property crisis and trade war weigh on outlook
Beijing reported GDP growth of 4.2% for 2025, below the government's 5% target, as the property sector's prolonged downturn, declining exports to the United States, and weak consumer confidence continued to drag on the world's second-largest economy.
Economy — March 5, 2026
China's economy grew by 4.2% in 2025, falling short of the government's official 5% growth target for the second consecutive year as the country grappled with a prolonged property sector crisis, declining exports to the United States following tariff escalation, and persistently weak consumer confidence.
The National Bureau of Statistics reported the figure in March, attributing the below-target performance primarily to continued contraction in real estate investment, which fell 11.5% over the year, and a slowdown in goods exports to the United States, which declined by roughly 22% in volume terms due to the 145 percentage-point tariff increases imposed in 2025.
Premier Li Qiang, speaking at the National People's Congress in early March, set a 2026 growth target of 'around 4.5%' — a deliberately modest figure that economists said reflected Beijing's recognition that the structural headwinds facing the economy would not dissipate quickly.
The property crisis, centred on heavily indebted developers such as Evergrande and Country Garden, has destroyed approximately $18 trillion in household wealth since peak prices in 2021. Despite government rescue funds and relaxed purchasing restrictions, new home prices remained 6.2% below year-earlier levels in February.
Beijing has responded with a combination of monetary easing and fiscal stimulus. The People's Bank of China cut its benchmark lending rate by a further 25 basis points in January 2026, while the government announced a special bond issuance of ¥2 trillion ($275 billion) to fund infrastructure and social security.
China's trade position with the rest of the world partially offset the US export decline. Exports to Southeast Asia, Africa, and Latin America all grew strongly, and China recorded an overall goods trade surplus of $980 billion in 2025 — a record — despite the US-related losses.
Analysts at the IMF revised China's 2026 growth forecast down to 4.0%, noting that domestic consumption remained constrained by the wealth destruction from property, cautious household behaviour, and a youth unemployment rate that hit 21.3% in urban areas in early 2026.
