China sees annual GDP growth of 5% despite domestic and global challenges

China posted robust economic numbers in 2025 and is anticipated to continue this progress in 2026, though projections vary. This news further solidifies the country’s role as a leading force in the global economy.

The Chinese economy experienced a newfound phase of expansion in 2025. For the first time in history, China’s gross domestic product (GDP) surpassed 140 trillion yuan (roughly 20 trillion USD), which translates to sustained year-over-year (YoY) GDP growth of 5%. The country’s gross national income also saw notable growth, having risen by 5.1% to over 139 trillion yuan in 2025.

This new development marks the successful completion of China’s 14th Five-Year Plan. It is a part of a series of five-year plans that have guided the Chinese economy since the 1950s. The 14th depicts a national economic and social development blueprint that covers 2021-2025. It was approved in March of 2021 by the National People’s Congress, consecutively meeting every annual economic milestone in the five years since.

China is the world’s second-largest economy after the United States and continues to grow at a sustained pace with no signs of slowing down. Experts anticipate 2026 will be another year of fruitful economic growth for the country after it remained largely unshaken by both internal and geopolitical uncertainties that rattled other major nations last year.

Chinese economic growth in 2025

The National Bureau of Statistics (NBS) reported that China’s GDP expanded by 5% in 2025, although quarterly GDP growth paints a different picture, as data shows that it progressively declined throughout the year. Quarterly GDP growth started strong at 5.4% in Q1 2025, followed by a 0.2% decline to 5.2% in Q2, 4.8% in Q3, and 4.5% in Q4. Momentum largely weakened throughout the year due to the fading of stimulus effects, softened domestic demand, and persistent property sector weakness. Fortunately, this structural economic weakness was balanced by growth in other sectors.

The primary driver of China’s YoY GDP growth came from the services sector, which expanded by 5.4% YoY, 4 basis points higher than annual GDP growth. This was led by information transmission, software, and IT services (tech), which experienced year-over-year growth of over 11%. Leasing and business services followed closely behind, with YoY growth of over 10%. This highlights China’s tech-led economic growth strategy and demand for producer-enabled services.

Industrial production also added value to China’s economic expansion in 2025. The sectors of equipment and high-tech manufacturing recorded YoY growth of over 9%, exceeding the national average, while mining and manufacturing grew by 5.6% and 6.4% YoY. Overall, the growth of value added in above-scale Chinese industrial sectors grew by 5.9% YoY in 2025.

China’s economic forecast for 2026

The Chinese economy had a very strong year in 2025, but forecasts for 2026 show that progress may begin to slow down. The International Monetary Fund (IMF) projects year-over-year GDP growth will be closer to 4.5% this year. They attribute this to subdued domestic demand led by property sector weakness and a weak social safety net that has impacted consumer spending. These factors have created deflationary pressures that force dependence on external demand. However, the Chinese government recognizes that depending on higher exports for growth is not feasible and is taking necessary measures to implement a different approach to continue economic growth momentum.

Goldman Sachs Research has a slightly more positive economic outlook for the Chinese economy in 2026, with a projected real GDP growth of 4.8%. Converse to the IMF, they attribute this growth projection to increased exports as China diversifies into non-U.S. markets and a lessening drag from the country’s declining property market on GDP growth. Goldman Sachs Research also cites above-consensus projections for monetary and fiscal policy easing. They note that China’s weakened labor market remains a difficult challenge to tackle, but anticipate the Chinese Government will issue targeted government policies to alleviate this and support income growth.

China’s 15th Five-Year Plan (2026-2030) prioritizes increasing consumption to drive economic growth and implementing policies like gradually increasing retirement age to expand the country’s labor force, thus boosting economic prospects. This comes after easing monetary policy, reducing investment in certain industries, and targeted social subsidies were economic focal points in 2025.

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