China's economy grew below 3% in 2025, misses official target
What's the story
China's economy grew by just 2.5% to 3% in 2025, according to estimates by the Rhodium Group think tank. The figure is significantly lower than the official target of around 5%. The sharp decline in fixed-asset investment has been blamed for this slowdown in the world's second-largest economy.
Growth target
China's growth target and unaccounted demand
Despite the dismal growth rate, Chinese policymakers are likely to announce that they met their full-year growth target of "around 5%." This will be done during the annual parliamentary session in March. However, the Rhodium Group report highlights a huge discrepancy of nearly half a trillion dollars in lost demand that hasn't been accounted for.
Policy implications
Impact on China's economic policy and negotiations
The unaccounted demand shortfall could affect Beijing's policy decisions and its negotiating power in trade talks with US President Donald Trump. The Rhodium Group report estimates a modest growth of 1% to 2.5% for the Chinese economy in 2026, far below the International Monetary Fund's (IMF) projection of 4.5%.
Investment decline
Fixed-asset investment and GDP growth
The report highlights a discrepancy between falling fixed-asset investment and capital formulation still contributing positively to GDP. It notes that no economy has recorded 5% real GDP growth amid years of persistent deflation, as China has for the last 10 quarters. The report questions whether metrics like falling land sales and second-hand equipment purchases were properly accounted for in China's economic data.