China closed 2025 with a steady — if unspectacular — economic performance that highlights the transition underway in its model of growth. GDP expanded 5.0% to 140.19 trillion yuan (about $19.6 trillion at the year’s average exchange rate of 7.1429 yuan per dollar), while services overtook more than half the economy, accounting for 57.7% of output. The pace of growth slowed through the year, from 5.4% in Q1 to 4.5% in Q4, underscoring the challenge of sustaining momentum amid domestic adjustment and global headwinds.
Demographics and domestic demand are emerging as structural constraints. China’s population fell to about 1.405 billion, a decline of 3.39 million from 2024, and the natural population growth rate turned negative. Consumer price inflation was essentially flat (CPI 0.0%), while producer prices slipped (PPI -2.6%), a mix that has kept inflationary pressure tame but has also reflected weak demand in some sectors.
The property sector, already in long-term correction, was the largest single drag on investment. Real estate development investment plunged 17.2% year‑on‑year and housing starts and completions fell sharply; sales and transaction activity for second‑hand homes contracted across every monitored city. Fixed‑asset investment outside household spending fell 3.8%, with construction and real‑estate‑related categories bearing the brunt.
Employment and social stability showed resilience. Urban new jobs rose by 12.67 million, the surveyed urban unemployment rate averaged 5.2%, and the headline number of employed people remained large at about 725 million. Household incomes grew in nominal and real terms — per‑capita disposable income rose 5.0% to 43,377 yuan (roughly $6,070) — but inequality and the urban‑rural income gap persist.
China’s industrial pivot and green transition are clear in the data. Industrial value added grew 5.8% and high‑tech, equipment manufacturing and digital product industries expanded strongly: high‑tech manufacturing and equipment manufacturing rose around 9%, industrial robot output surged, and new energy deployment accelerated — solar generation jumped nearly 40% and total clean energy generation rose 14.4%. New‑energy vehicles continued to scale, with output up 25.1% to 16.52 million units.
Trade remained a bright spot. Exports rose 6.1% even as imports were nearly flat; the goods trade surplus widened to 85,094 billion yuan. China deepened trade ties with ASEAN and Belt‑and‑Road partners, while exports to the United States fell sharply. Foreign direct investment flows were mixed: the number of newly established foreign firms rose strongly but actual used foreign capital fell, reflecting a shift in investor behavior and selective capital inflows.
Policy and finance reflect a stimulative but cautious stance. Broad money (M2) grew 8.5%, social financing expanded and the new corporate lending rate softened; fiscal revenue edged down and budgetary spending rose modestly. Authorities continue to prioritise stability and targeted support — tax cuts, credit easing for specific sectors and measures to manage financial risks — rather than broad sweeping stimulus.
The picture that emerges is one of managed transition: China’s government is steering the economy away from property and heavy investment dependence toward services, advanced manufacturing and clean energy, while buying time for structural reforms. That adjustment is producing slower headline growth and concentrated pain in real estate and parts of traditional industry, but it is also fostering new capacity in tech and green sectors. The near‑term political priority will be keeping employment and social order stable while sustaining a longer‑term upgrade of the economy.