China’s 2025 economic growth likely slowest in decades

AFP :

China’s economy likely grew last year at its weakest rate in three decades, outside of the pandemic, according to an AFP survey of analysts ahead of official data on Monday.

The world’s second-largest economy struggled to shore up its property market while boosting domestic consumption as Chinese exports to the key US market were crimped by Donald Trump’s tariffs.

President Xi Jinping said last month that growth probably met an annual target of “around five percent” in 2025.

Economists estimated a median figure of 4.9 percent, in what would be the weakest growth since 1990 when China was under Western sanctions after the deadly Tiananmen Square crackdown.

The announcement will be “close enough for officials to declare victory” in meeting the roughly five-percent number, a “political comfort blanket” for Beijing, said Sarah Tan of Moody’s Analytics.

But the composition of Chinese growth was “deeply uneven” and official figures “mask the weak sentiment on the ground”, she said.

Analysts agreed the main problem was China’s property sector, which has failed to overcome a persistent debt crisis despite rate cuts and loosened restrictions on homebuying.

House prices have risen slightly in some large cities but the broader market remains sluggish.

“We see no sign of a near-term property sector bottoming out,” analysts from Goldman Sachs said.

Without bolder measures like converting housing stock into affordable homes, the industry will remain unstable, analysts warned.

Investments in property and infrastructure likely took a hit last year.
Official figures already show that fixed-asset investment slowed 2.6 percent between January and November, its sharpest rate since 2020.

Larry Hu and Yuxiao Zhang of Macquarie Group attributed the decline to unannounced “data revisions” by Beijing, adding they did not expect policymakers to respond.
Property investment could fall by 12 percent in 2026, they predicted.

Tianchen Xu of the Economist Intelligence Unit (EIU) also forecast a real-estate “correction” in 2026, adding: “This will remain a drag on growth.”

Meanwhile, constraints on local government finances pushed a wider slowdown in manufacturing and infrastructure investment last year, Goldman Sachs analysts said.

China’s outbound foreign direct investment continued to outpace inbound flows in recent quarters, they noted.

Domestic spending is also cause for concern. Retail sales, a key indicator of consumption, grew at their slowest pace in nearly three years in November.

Economists have long urged Beijing to move towards a growth model powered by consumption rather than exports and manufacturing.