Source: Fortune
Summary
China’s economy grew 5% in 2025, driven by a record trade surplus of $1.19 trillion, despite weak domestic demand and a struggling property sector. Exports surged 5.5%, but imports were flat, and retail sales growth slowed to 0.9% in December. Fitch Ratings expects GDP growth to slow to 4.1% in 2026, citing constrained domestic demand and investment headwinds. The property sector, which once accounted for a quarter of China’s GDP, continues to weigh on the economy, with 80 million unsold or vacant homes.
Our Reading
The numbers tell one story.
China’s export-led growth is masking weakness in domestic demand and the property sector. The record trade surplus is a result of surging exports, but imports are flat, indicating weak domestic demand. The property sector’s decline is having a ripple effect on the economy, with 80 million unsold or vacant homes weighing on sales, prices, and consumer confidence. The government’s pivot to a new development model may not be enough to revive the economy. The real test will be whether China can rebalance its growth to a consumer-led model, away from an export- and investment-led model.
China’s growth model is becoming increasingly difficult to sustain.
Author: Evan Null
