President Xi Jinping declared on Wednesday that China is on course to achieve its “around 5%” growth target for 2025, reaching approximately 140 trillion yuan ($20 trillion), while pledging “more proactive” macroeconomic policies in 2026 to sustain momentum amid persistent domestic challenges and external trade frictions.
In a televised New Year’s address broadcast by state broadcaster CCTV and remarks at a traditional New Year’s tea party with top Communist Party officials, Xi described 2025 as an “extraordinary” year marked by strong resilience, export performance, and technological breakthroughs.
“Our country’s economy is expected to move forward under pressure… showing strong resilience and vitality,” he told party leaders, highlighting advancements in defense capabilities and science and technology as reaching “new levels.”
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The confirmation aligns with official projections and recent data showing robust exports offsetting weaknesses in consumption and property investment. China’s trade surplus surpassed $1 trillion for the first time in November, driven by front-loading ahead of potential U.S. tariffs and resilient global demand for manufactured goods. Full-year growth is widely anticipated to land near the target, buoyed by fiscal stimulus, including special treasury bonds and a record surplus providing FX buffers.
However, independent analyses paint a more nuanced picture. The Rhodium Group think tank estimated actual growth at just 2.5% to 3%—roughly half the official figure—citing discrepancies in data reporting and underlying economic strains. BBVA Research raised its 2025 forecast to 5.0%, noting strong first-half performance and stable Q3 growth at 4.8%, down 0.4 points from Q2. The first three quarters officially grew 5.2%, but the seasonally adjusted quarter-on-quarter pace slowed, reflecting headwinds like soft household spending and property woes.
Xi reiterated commitments to “improve the quality of the economy while maintaining reasonable growth” and advance “common prosperity,” but offered no specific new measures. The emphasis echoes the Central Economic Work Conference earlier this month, where leaders pledged a “proactive” fiscal stance for 2026—including “special actions to boost consumption”—and acknowledged “prominent” imbalances between strong supply and weak demand.
Policymakers have allocated 62.5 billion yuan from special treasury bonds for a 2026 consumer goods trade-in scheme offering subsidies for appliances, and front-loaded 295 billion yuan in central budget funding for major projects.
Xi spotlighted China’s “fastest growing innovation capabilities,” citing surges in artificial intelligence, large language models, and “new breakthroughs in independent chip development.” This reflects Beijing’s intensified drive for self-reliance amid U.S. export controls on advanced semiconductors.
The National Integrated Circuit Industry Investment Fund (“Big Fund”) launched its third phase in 2024 with 344 billion yuan in capital, channeling hundreds of billions into domestic chipmaking. Reports emerged this month of Chinese scientists advancing a prototype extreme ultraviolet lithography machine capable of producing cutting-edge nodes—a capability Washington has sought to restrict.
Despite export strength, second-half momentum faltered with soft household spending, persistent deflation with core CPI averaging below 1%, and a prolonged property crisis dragging on developer liquidity and consumer confidence. Property investment contracted 10% in 2025, while retail sales growth slowed to 3%.
Policymakers have responded with targeted measures: allocating 62.5 billion yuan from special treasury bonds for a 2026 consumer goods trade-in scheme offering subsidies for appliances, and front-loading 295 billion yuan in central budget funding for major projects.
Concerns over a second-half slowdown persist, weighed down by soft household consumption, persistent deflation, and a prolonged crisis in the property sector. Despite exports holding up, growth momentum has faltered, weighed down by soft household consumption, persistent deflation, and a prolonged property sector crisis.
China’s trade surplus, which topped $1 trillion for the first time in November, could lead to more tensions with trade partners, some of which are calling on China to do more to reform its economy and reduce its dependence on exports to support growth.
Analysts anticipate continuity in “moderately loose” monetary settings and expanded fiscal support, potentially via a higher deficit target of 4% of GDP and more special bonds. Focus areas include consumption vouchers, property stabilization (white-list financing, inventory purchases), and high-tech investment.
Chinese equities capped a strong year, with the Shanghai Composite Index gaining 18%—its best since 2019—and the blue-chip CSI300 also up 18%, the strongest in five years. The onshore yuan appreciated past the psychologically key 7-per-dollar level for the first time in 2.5 years, on track for its largest annual rise since 2020, supported by capital controls and export earnings.