As expected, China's economy grew by 5% in 2025, with a 5.4% expansion in the first quarter, 5.2% in the second, 4.8% in the third, and 4.5% in the fourth. Evaluating the performance of China's economy in 2025 is a complex task, defying simple labels of "good" or "bad." Amidst a profound transition between economic cycles, the decline of traditional industries and the simultaneous rise of new sectors painted the complete picture for the year. The state of China's 2025 economy can be comprehensively assessed through ten representative data points.
The first key figure is the total economic output. The GDP surpassed 140 trillion yuan for the first time. Considering the depreciation of the US dollar in 2025, the gap in total economic size between China and the United States narrowed once again.
The second data point concerns nominal growth. While the annual target of 5% real growth was achieved, the nominal growth rate was only 4%, hampered by low price levels and a GDP deflator of -1%. This discrepancy largely explains why the micro-level experience felt weaker than the macro data suggested. With a negative deflator, the statistical concepts of nominal and real growth effectively reverse; the statistically reported "real" growth becomes the nominal growth in practical terms. From a nominal growth perspective, the economic expansion was relatively low, not reaching the 5% target and falling below potential growth levels.
The third data point is exports. Total import and export value grew by 3.8% in 2025, exceeding 45 trillion yuan. Exports alone approached 27 trillion yuan, rising 6.1% (or 6.6% in US dollar terms), making it the strongest performer among the three key drivers of growth. This achievement is particularly notable given the context of trade tensions initiated by Trump, which led to a nearly 20% annual decline in exports to the United States. China's exports to the US totaled $420 billion in 2025, a decrease of $100 billion from 2024. Against this backdrop, the export data is indeed hard-won, and the resilience of Chinese exports and the adaptability of export-oriented companies deserve significant recognition.
The fourth data point is consumption. The total retail sales of consumer goods exceeded 50 trillion yuan for the full year, with a growth rate of 3.7%. Compared to the pre-2020 average annual growth rate of 8%, this figure is less than half, indicating that consumption has not yet returned to its normal trajectory. Notably, consumption growth was front-loaded in 2025, tapering off towards the year-end, with the growth rate dropping to just 0.9% by December. Vigorously stimulating consumption has become an urgent priority.
The fifth data point is fixed-asset investment. Fixed-asset investment fell by 3.8% for the full year. Negative growth in fixed-asset investment is extremely rare since 1978. From 1978 to the present, there have been only three years of negative growth: 1981, 1989, and 2025. The 1981 decline was a deliberate cooling of an overheated investment sector, the 1989 contraction was part of a rectification campaign, while the 2025 drop was primarily due to a sharp downturn in real estate. Investment in real estate development plummeted by 17.2%.
This 17.2% decline marks the largest annual drop since the commercialization of the housing market in 1998 and is the first time since 2000 that the decline has exceeded 15%. The sixth data point concerns prices. The Consumer Price Index remained flat for the year, meaning it neither rose nor fell. However, the Producer Price Index declined for the 39th consecutive month, a streak second only to the 54-month decline from 2012 to 2016. This trend is closely linked to a vicious cycle of a sluggish property market, industrial overcapacity, and weak expectations.
The seventh data point focuses specifically on real estate. Virtually all metrics for the real estate sector showed declines, with investment, sales, housing starts, and completions all in negative territory, and housing prices falling across the board. Investment in real estate development fell by 17.2%, construction area declined by 10%, new housing starts dropped by over 20%, completions fell by over 18%, sales value decreased by over 12%, and sales area shrank by over 8%. Following a minor rebound in 2024, the real estate sector entered a phase of accelerated decline in 2025. By December, housing prices had fallen in almost all 70 major cities. The drag from the real estate sector was the primary reason for the overall weakness in China's economy in 2025.
The eighth data point examines population. The number of births in 2025 was 7.92 million, falling below the 8 million mark for the first time, compared to 9.52 million births in 2024. To put 7.92 million into perspective, this is the lowest figure since 1738, the third year of Emperor Qianlong's reign. What does this signify? If the current trend continues, China's total population will fall below 1.4 billion by 2027.
The ninth data point is electricity consumption. China's total electricity consumption surpassed 100 trillion kilowatt-hours for the first time in 2025, ranking first globally, doubling that of the United States, and equaling the combined consumption of the European Union, Russia, India, and Japan. Artificial intelligence, semiconductors, and new energy vehicles were the largest contributors to the growth in electricity demand.
The tenth data point highlights the impressive performance of artificial intelligence, computing power, high-tech, and new energy. Value-added output in high-tech manufacturing grew by 9.4%, with specific sectors surging: 3D printing equipment by 52.5%, industrial robots by 28%, and new energy vehicles by 25.1%. Shipments of AI chips increased by 45%, investment in computing infrastructure grew by over 50%, smart vehicle equipment by 177%, and exports of new energy vehicles by 71.7%. The tenth data point is the most critical perspective for understanding China's 2025 economy.
The decline of traditional industries and the rise of emerging sectors formed the dominant theme of China's economy in 2025, with the transition between cycles becoming distinctly visible and accelerating. While sectors like real estate, coal, cement, construction, decoration, apparel, and catering were in decline, artificial intelligence, high-tech, new energy vehicles, semiconductors, and computing infrastructure raced ahead, presenting a scene of robust growth. A summary of China's economy in 2025 can be drawn: First, there is a gap between the 5% macro growth figure and the sentiment of micro-level entities. Second, external demand was stronger than domestic demand. Third, real estate became the biggest drag on growth. Fourth, AI emerged as the brightest spot. Fifth, the transition between old and new cycles was pronounced.
Industries represented by high-tech, artificial intelligence, and new energy vehicles are accelerating forward. 2025 was truly a turning point in the shift between economic cycles. It is an oversimplification to label China's economy as simply good or bad. However, for 2026, we believe policy support should be intensified for certain sectors, such as real estate, to reduce the downward pressure on the economy. To stabilize economic expectations for 2026, alongside the new momentum from this structural transformation, it will be crucial to stabilize prices, stabilize the property market, bolster domestic demand, and continue pushing forward new initiatives, while also seeking an improvement in expectations regarding the old growth drivers. Only by stabilizing the old drivers while accelerating the new ones can a favorable situation for 2026 be established.