China Weathers the Tariff War as Its Economy Grows 5% in 2025
Looking ahead, slower growth is expected in 2026. Deutsche Bank forecasts China’s economy will expand by around 4.5%.
Quick overview
- China's GDP grew by 5% in 2025, matching the previous year's pace and meeting official targets despite a tariff war with the U.S.
- Growth slowed to 4.5% in the final quarter of 2025, marking the weakest quarterly expansion since late 2022.
- Strong exports contributed to a record trade surplus of $1.2 trillion, despite a 20% decline in exports to the U.S.
- Policymakers are focusing on boosting domestic demand, but results have been limited, with slower growth expected in 2026.
Exports to new markets proved key, though growth slowed in the final quarter of last year.
China reported on Monday that its gross domestic product (GDP) expanded by 5% in 2025, according to data from the National Bureau of Statistics (NBS), matching the previous year’s pace and meeting official growth targets despite the tariff war with the United States.
However, growth slowed to 4.5% in the final quarter of the year, the government said. That marked the weakest quarterly expansion since late 2022, when China began easing its strict Covid-19 restrictions. The world’s second-largest economy had grown at an annual rate of 4.8% in the previous quarter.
Both figures came in above analysts’ expectations, which had forecast quarterly growth of around 1% and annual growth of roughly 4.4%.
Chinese leaders have sought to accelerate growth following the downturn in the property market and the disruptions caused by the pandemic, which rippled across the broader economy.
As expected, full-year growth aligned with the government’s official target of “around 5%.”
Chinese Exports and Imports
Strong exports helped offset weak consumer spending and subdued business investment, contributing to a record trade surplus of $1.2 trillion.
Exports to the United States suffered after President Donald Trump returned to office early last year and reignited a tariff war. That decline, however, was largely offset by increased shipments to other markets. Rising imports of Chinese goods through platforms such as Temu and Shein have prompted some governments to take steps to protect domestic industries.
Trump and Chinese leader Xi Jinping agreed to extend a truce in their tariff dispute, which also helped ease pressure on China’s exports. Even so, Chinese exports to the U.S. fell by 20% last year.
The NBS noted that, “in the face of complex changes in the domestic and global economic environment”—a veiled reference to tariffs—“the national economy advanced through high-quality development driven by innovation despite mounting economic pressures.”
“The economy maintained momentum toward steady progress in 2025 despite multiple headwinds,” the statement added.
What Chinese Authorities are Doing
Chinese policymakers have repeatedly emphasized boosting domestic demand as a priority, but results so far have been limited. A trade-in program encouraging drivers to replace older vehicles with more energy-efficient models, for example, has lost momentum in recent months. Stabilizing—rather than fully recovering—the domestic property market remains key to restoring public confidence and, in turn, reviving household consumption and private investment.
China has also rolled out trade-in subsidies for household appliances such as refrigerators, washing machines, and televisions. While major consumer stimulus measures in 2025, including these subsidies, are set to continue into 2026, they could be scaled back, said Weiheng Chen, global investment strategist at J.P. Morgan Private Bank, in a recent note.
Looking ahead, slower growth is expected in 2026. Deutsche Bank forecasts China’s economy will expand by around 4.5% next year, according to the Associated Press.
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