China’s economy likely expanded at its weakest pace in a year in the third quarter of 2025, according to a Reuters poll, as renewed trade frictions with the United States and persistent domestic weakness threatened to derail Beijing’s 5% growth target.
The slowdown, which points to mounting structural strains, has intensified pressure on Chinese authorities to roll out new stimulus measures before the year’s end.
According to the poll of 45 economists, China’s gross domestic product (GDP) is forecast to have grown by 4.8% year-on-year between July and September — down from 5.2% recorded in the second quarter and the slowest pace since the third quarter of 2024. The reading would still surpass the 4.5% projection made in a July poll, but remains below the government’s target.
Larry Hu, Chief China Economist at Macquarie, said he expects third-quarter growth to dip to 4.5%, adding that Beijing will likely resort to “mini-stimulus measures in Q4, especially for housing,” as it tries to cushion the economy.
“In the long term, Beijing will use domestic stimulus to cushion external shocks, in order to maintain relatively steady growth,” Hu added.
The slowdown comes despite Beijing’s modest support measures earlier this year, which sought to preserve policy space for future shocks amid resilient exports and buoyant stock markets. However, the renewed U.S.-China trade tensions have dimmed sentiment.
Trade frictions escalated sharply after Beijing tightened export controls on rare earth elements — critical materials for high-tech and defense industries — prompting U.S. President Donald Trump to threaten a 100% increase in tariffs on Chinese goods from November 1. Still, U.S. officials have signaled a willingness to lower the temperature, suggesting both sides could open new channels of dialogue.
China’s reliance on manufacturing and overseas demand has made it highly vulnerable to such shocks. Many exporters are already struggling with steep tariff costs, forcing a pivot toward new markets.
Wang Pengjie, sales manager at a car floor mat exporter, told Reuters that his company has lost between 60% and 70% of its U.S. orders this year.
“We are trying to compensate by expanding into emerging markets, including Southeast Asia, Mexico, and the Middle East,” he said. “But these new markets can’t make up for it. The competition is very intense, and we have to compete more on price.”
To survive, Wang’s company is focusing on high-end products, a strategy increasingly common among Chinese exporters caught in the tariff crossfire.
Economic Indicators Show Softening Across Sectors
On a quarterly basis, GDP is projected to have expanded by just 0.8% in the third quarter, down from 1.1% in the second quarter. Official GDP data, along with September retail sales, industrial output, and fixed-asset investment figures, will be released on Monday.
Despite a slight rebound in export growth in September, much of the recent economic data points to waning momentum. The property sector remains mired in a prolonged slump, while weak consumer demand has continued to exert downward pressure on prices, heightening the risk of deflation. Analysts say these factors support the case for additional fiscal and monetary support.
The People’s Bank of China (PBOC) has so far refrained from aggressive easing, maintaining its key policy rates for four consecutive months. Analysts, however, expect more targeted stimulus steps in the coming weeks. Lynn Song, Chief Greater China Economist at ING, noted that “the recent escalation of tensions between China and the U.S. ahead of potential talks between Presidents Xi and Trump at the end of the month could keep the PBOC on hold for the rest of October.”
“That would leave ammunition to support markets if talks do not go well,” Song said. “November, consequently, remains an interesting window to watch for potential easing.”
More Stimulus on the Horizon
Beijing has announced a range of limited interventions, including interest subsidies on household and business loans to spur consumption. It also plans to deploy about 500 billion yuan in policy-based financial tools to accelerate investment projects and bolster growth.
According to the Reuters poll, analysts expect the PBOC to cut its seven-day reverse repo rate — a key policy benchmark — by 10 basis points in the fourth quarter, alongside a similar reduction in the benchmark loan prime rate (LPR). The central bank is also expected to trim the reserve requirement ratio (RRR) by 20 basis points to ease liquidity conditions.
Even with these measures, full-year growth is projected to fall short of Beijing’s “around 5%” target, with analysts forecasting 4.8% for 2025 and a further slowdown to 4.3% in 2026.
China’s consumer price inflation, meanwhile, remains near zero — well below the government’s 2% target — and is expected to edge up only modestly to 0.9% next year.
Policymakers Eye Long-Term Strategy
Against this backdrop, Chinese leaders are scheduled to meet from Monday to Thursday for a closed-door policy conference that will help shape the country’s 15th Five-Year Plan. The agenda is expected to prioritize high-tech manufacturing and innovation, particularly as China seeks to insulate its economy from the deepening rivalry with Washington.
The leadership meeting will likely emphasize self-reliance in technology and supply chains — a strategic pivot already reflected in recent state-led investment drives in semiconductors, electric vehicles, and green energy.
But analysts warn that these structural shifts will take time to translate into sustainable growth. Currently, China’s policymakers are caught between two imperatives: managing the short-term fallout from the U.S. trade war and addressing long-term vulnerabilities in property, debt, and domestic consumption.
