China’s economy grew 4.5% in the fourth quarter, the weakest pace in nearly three years

In the Q4 of 2025, China’s economic growth came in at 4.5%, which is weaker than the 4.8% seen in the third quarter, and matches the slow pace from Q1 2023.

Despite that though, the full-year GDP number did hit president Xi Jinping’s target of 5%, according to data from the National Statistics Bureau released on Monday.

Thing in, despite it all, the Chinese just aren’t spending as much as they used to. Retail sales in December were up just 0.9% from the year before. That’s less than the 1.2% economists were expecting and worse than 1.3% in November. Investment kept falling too. The only part of the economy that held up was manufacturing, but even that wasn’t strong enough to carry the rest. The real estate mess hasn’t gone anywhere, and people are still holding back.

China’s steel slows down while aluminum breaks records

China’s aluminum output hit a new record in 2025, surging by 2.4% to 45.02 million tons, and in December alone, producers pushed out 3.87 million tons, the most ever in the history of the second-largest economy on earth.

The stats bureau said the metal’s been growing every year since 2020, and of course most of it goes into electric cars, power lines, and renewables. Jinping had earlier imposed a cap of 45 million tons back in 2017 to control oversupply and cut carbon emissions, but factories are now running right at that edge.

China’s steel total output meanwhile dropped by 4.4% to 961 million tons in Q4, which is the first time it’s been under 1 billion since 2019. December was especially weak, with just 68.2 million tons, the lowest in two years. The industry hasn’t been given hard targets like aluminum, but policymakers have warned about making too much. And with the property crisis still going on, there’s less demand for steel.

China’s coal production surges to new record even amid safety inspections

China’s coal production also made a new all-time high after hitting 4.83 billion tons, up 1.2% from the year before. That happened even with stricter safety checks in the second half of the year that forced some mines to slow down.

Back in 2021, China faced power shortages and factory blackouts because there wasn’t enough coal. After that, the government told energy companies to open more mines and ramp up supply.

Like we hinted earlier, prices haven’t really improved across China, as its GDP deflator, which tracks price changes across everything, stays negative since 2023.

Larry Hu, the Macquarie economist, is predicting that it might drop another 0.5% in 2026, which would be the longest stretch of deflation in the country’s history.

Banks aren’t handing out loans either. New loans dropped to 16.27 trillion yuan in 2025. That’s about $2.33 trillion, the lowest in seven years. People and companies just aren’t borrowing, which puts more heat on the central bank to act.

The People’s Bank of China tried to ease things last week, cutting rates by 25 basis points and expanding its programs to support farming, tech, and private businesses.

Over at Goldman Sachs, analysts now think more rate cuts are coming, and they also expect the central bank to cut its reserve requirement ratio by 50 basis points, as well as cut the main policy rate by another 10 in H1 of this year.

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