China's National Bureau of Statistics announced on 19/1 that the country's gross domestic product (GDP) expanded by 5% last year. This growth rate successfully met the government's target, set early last year, for an increase of "around 5%."

This growth momentum was primarily driven by flourishing exports. Last year, China recorded a trade surplus of 1,190 billion USD, a new record. A decline in exports to the US was offset by a strategic redirection towards other international markets.

Electric vehicles preparing for export at a seaport in Jiangsu, China on 9/5/2024. Photo: Reuters

Robust export performance helped China mitigate challenges from other domestic sectors. Domestic consumption remained sluggish, and the real estate market continued to grapple with its ongoing crisis.

Retail sales, a key indicator of consumption, increased by 3.7% last year, falling short of the 4.1% forecast by economists in a survey conducted by Chinese data provider Wind. Investment in fixed assets, which includes infrastructure, manufacturing, and construction projects, decreased by 3.8% compared to the previous year. Real estate investment saw a significant drop of 17.2%.

Conversely, industrial output experienced a record increase of 5.9% in 2025, while the urban unemployment rate remained stable at 5.2%.

The Chinese economy showed signs of losing momentum towards the end of last year. GDP growth in the fourth Quarter was only 4.5%, a decrease from 4.8% in the third Quarter. This also marked the lowest growth rate in nearly three years.

Economists have consistently called for China to undertake structural reforms to boost domestic consumption and reduce its reliance on exports. They argue that the current growth model poses many long-term risks.

"Declining investment and weak household consumption make China's economy increasingly dependent on exports. This situation is unsustainable for both China and the global economy," said Eswar Prasad, Professor of Trade Policy and Economics at Cornell University.

Ha Thu (based on CNBC, SCMP)