China's economy grows 5% in 2025, buoyed by strong exports despite
Trump's tariffs
[January 19, 2026] By
CHAN HO-HIM
HONG KONG (AP) — China's economy expanded at a 5% annual pace in 2025,
buoyed by strong exports despite U.S. President Donald Trump's tariffs.
However, growth slowed to a 4.5% rate in the last quarter of the year,
the government said Monday. That was the slowest quarterly growth since
late 2022, when China was beginning to loosen stringent COVID-19
pandemic restrictions. The economy, the world’s second largest, grew at
a 4.8% annual pace in the previous quarter.
China’s leaders have been trying to spur faster growth after a slump in
the property market and disruptions from the pandemic rippled through
the economy.
As expected, annual growth last year was in line with the government’s
official target for an expansion of “around 5%.”
In quarterly terms, the economy grew 1.2% in October to December.
Strong exports helped to compensate for weak consumer spending and
business investment, contributing to a record trade surplus of $1.2
trillion.
Chinese exports to the U.S. suffered after President Donald Trump
returned to office early last year and began raising tariffs. But that
decline was offset by shipments to the rest of the world. Soaring
imports of Chinese goods are leading some other governments to take
action to protect local industries, in some cases raising import duties.
Trump and Chinese leader Xi Jinping agreed to extend a truce in their
bruising tariffs war, also helping to alleviate pressure on China’s
exports. But China's exports to the U.S. still fell 20% last year.
“The key question is how long this engine of growth can remain the
primary driver,” Lynn Song, chief economist for Greater China at Dutch
bank ING wrote in a recent note. “Should more economies also start
ramping up tariffs on China, as Mexico has done and the E.U. has
threatened to do, eventually, a tighter squeeze will be seen."
China’s leaders have repeatedly highlighted boosting domestic demand as
a policy focus, but their effects have so far been limited. A trade-in
program for drivers to replace older cars with more energy-efficient
models, for example, has been losing steam in recent months.
“Stabilization, not necessarily recovery, of the domestic property
market is key to revive public confidence and, hence household
consumption and private investment growth,” said Chi Lo, senior market
strategist for Asia Pacific at BNP Paribas Asset Management.
China has also provided trade-in subsidies for home appliances such as
refrigerators, washing machines and TVs. While major consumer stimulus
policies in 2025 -- including such subsidies -- are set to continue in
2026, they may be scaled back, Weiheng Chen, global investment
strategist at J.P. Morgan Private Bank, said in a recent note.
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Delivery men drop their parcels at a locker in Beijing, China, on
Jan. 15, 2026. (AP Photo/Ng Han Guan)
 Investments in artificial
intelligence and other advanced technologies remain a key priority
for China’s ruling Communist Party as it moves to boost
self-reliance and rival the U.S. Meanwhile, many ordinary Chinese
and small businesses are struggling with tough times and troubling
uncertainty over jobs and incomes.
Liu Fengyun, a 53-year-old noodle restaurant owner in a small county
in southwestern China’s Guizhou province, said business has become
very difficult these days. Some of her customers told her that
“money is hard to earn now” and “making breakfast at home is
cheaper.”
“People all say, ‘The overall environment is not good right now —
what more can you expect? People don’t have money anymore. Nothing
is easy to do now,’” Liu said.
Kang Yi, head of China’s National Bureau of Statistics, on Monday
told reporters that China’s economy had sustained "steady progress
in 2025 despite multiple pressures” and has “solid foundations" in
countering risks.
Some economists and analysts believe China’s actual economic growth
in 2025 was slower than official data suggest. The Rhodium Group, a
think tank, said last month it expected China’s economy to grow only
by 2.5% to 3% last year.
The Chinese economy expanded at a 5% annual rate in 2024, and 5.2%
in 2023, according to government data. Ambitious official growth
targets have also trended down over the past few years, from 6% to
6.5% in 2019 to “around 5%” in 2025.
A slower annual expansion is expected for 2026. Deutsche Bank
forecasts that China’s economy will grow about 4.5% in 2026.
A strong and stable economy is considered crucial for social
stability, a primary priority for China's leaders. While China could
probably maintain social stability even at lower economic growth
rates, Beijing “wants the economy to keep growing”, said Neil
Thomas, a fellow at the Asia Society Policy Institute’s Center for
China Analysis.
China likely needs to sustain a roughly 4%-5% annual expansion in
order to reach its soft target by 2035 of $20,000 gross domestic
product (GDP) per capita, he said.
___
Associated Press researcher Shihuan Chen in Beijing contributed to
this report.
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