China's economic growth slows amid sputtering domestic demand

BEIJING

China's economic growth slipped below 5 percent in the third quarter of 2025, official data showed on Oct. 20, the slowest pace in a year in the face of trade headwinds and a continued domestic consumer slump.

The data was released just hours before state news agency Xinhua announced the start of a closely watched four-day meeting in Beijing with top Communist Party officials focused on long-term economic planning.

It also comes ahead of in-person discussions later this month between top Chinese and U.S. trade officials, as well as a potential meeting between presidents Donald Trump and Xi Jinping.

Trump earlier this month threatened blistering 100 percent tariffs on Chinese goods from Nov. 1, in response to Beijing's sweeping export controls in the strategic rare earths sector.

Gross domestic product in the July-September quarter expanded 4.8 percent year-on-year, the National Bureau of Statistics (NBS) said, down from 5.2 percent in the previous three months.

The figure represented the slowest growth since the same quarter last year, when GDP expanded 4.6 percent.

As trade pressure builds, experts say China must adjust to a growth model driven more by domestic household spending than exports and manufacturing.

Fixed-asset investment in the first three quarters saw a slight decline of 0.5 percent year-on-year, the data showed, largely because of a sharp contraction in real estate investment.

That decline is "rare and alarming," Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, wrote in a note.

Zhang noted that recent stimulus measures "should help to mitigate the downward pressure on investment" in the fourth quarter.

"Nonetheless, the risk to GDP growth in Q4 is likely on the downside," he added.

Domestic spending has lagged in recent years, having failed to fully recover from the COVID-19 pandemic, which hammered consumer sentiment.

In a further sign of weakness, the NBS said retail sales growth slid to three percent year-on-year in September, in line with estimates in a Bloomberg survey but down from August and the slowest rate since November.

"This slowdown reflects the waning impact of the consumer goods trade-in scheme, which had boosted sales of certain products earlier in the year," wrote Julian Evans-Pritchard of Capital Economics.

"China's growth is becoming increasingly dependent on exports, which are offsetting a slowdown in domestic demand," he wrote.

"This pattern of development is not sustainable," he added.

Another challenge facing economic planners is a protracted debt crisis in China's vast real estate sector, long a key driver of activity.

New residential property prices fell year-on-year in September in 61 out of 70 cities surveyed by the National Bureau of Statistics, NBS data showed on Monday, a sign of persisting homebuyer wariness.