Pedestrians walk through the Huaqianbei Electronics Market area in Shenzhen, Wednesday, Jan. 14, 2026.
Qilai Sheng | Bloomberg | Getty Images
China’s economic growth slowed to its weakest pace in three years in the fourth quarter as domestic demand softened, although full-year growth met Beijing’s target despite rising trade with the US and a prolonged slump in real estate.
According to the data of the National Bureau of Statistics on Monday, the gross domestic product increased by 4.5% in October-December. That slowed from 4.8% in the third quarter and was the weakest reading since the first quarter of 2023. growth was also 4.5%.
Full-year economic output was 5 percent, beating the official target by about 5 percent.
Separate data for December showed weaker domestic consumption and lower investment, while manufacturing improved.
Retail sales, a key measure of consumption, rose 0.9% in December from a year earlier, missing economists’ forecasts of a 1.2% increase and slowing from 1.3% in the previous month.
Industrial production rose 5.2% in December, beating expectations for a 5% rise from 4.8% in the previous month.
Investment in fixed assets, which includes real estate, fell 3.8% last year, worse than economists’ forecast of a 3% decline in a Reuters poll.
The city’s unemployment rate remained unchanged at 5.1% in December.
The world’s second-largest economy held steady in 2025, helped largely by lower-than-expected tariff rates and a push by exporters to diversify away from the U.S., which allowed its policymakers to refrain from launching massive stimulus.
China posted a record trade surplus About 1.2 trillion dollars last year was driven by increased exports to non-U.S. markets as manufacturers redirected shipments to avoid higher U.S. tariffs.
According to OCBC managing director Tommy Xie, headwinds from front-loading shipments, tight transshipment controls and expected currency appreciation have been limited. Xi expects China’s exports to grow by about 3% in 2026.
Economists have warned that the current growth pattern poses long-term risks, focusing on structural economic reforms to boost domestic consumption and reduce dependence on exports and investment.
Eswar Prasad, a professor of trade policy and economics at Cornell University, said: “Falling investment and weak household consumption have made China’s economy more dependent on exports for power growth, which has been bad for both China and the global economy.”
Beijing has sought to curb excess industrial capacity and curb aggressive price wars. Consumer inflation accelerated to 0.8% in December, the fastest pace in nearly three years, while producer prices fell 1.9%.
However, China’s GDP deflator, the broadest measure of prices for goods and services, has remained negative since 2023 and is expected to contract by 0.5% in 2026, the longest stretch on record, according to Macquarie’s chief China economist Larry Hu.
The economy continues to struggle with weak domestic spending amid a prolonged property slump and persistent deflationary tensions. New bank loans decreased to a a seven-year low 16.27 trillion yuan ($2.33 trillion) in 2025, reflecting sluggish demand for debt and pressure on the government to provide more stimulus.
The People’s Bank of China last week announced a package of credit easing measures, including a 25-basis-point cut in rates on various lending instruments and increased quotas for lending programs targeting key sectors such as agriculture, technology and private enterprises.
Economists at Goldman Sachs expect the central bank to cut the reserve requirement ratio by 50 basis points and the policy rate by 10 basis points in the first quarter.
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