What was China's GDP growth in 2025?

China's full-year GDP growth reached 5.0% in 2025, meeting the government's official target.

Why is the Q4 GDP data concerning for markets?

Growth slowed to 4.5% in the fourth quarter, a three-year low, signaling a loss of momentum and persistent weakness in domestic consumption.

How does China's economic data impact the Australian Dollar (AUD)?

As a major trading partner, China's demand for commodities directly affects the AUD. Slower Chinese growth often prompts a bearish sentiment for AUD/USD.

China GDP Hits 5% Target But Q4 Slowed to 4.5% | FXPremiere

China achieved its 5% growth target for 2025, but a slowdown to 4.5% in Q4 highlights persistent domestic consumption challenges and export dependency.

China’s national accounts delivered a clean headline for 2025, with full-year GDP growth reaching 5.0%, successfully hitting the official government target. However, beneath the surface of this achievement lies a more complex narrative: a notable fourth-quarter slowdown and a widening gap between industrial production and domestic consumption.

The 2025 Macro Picture: Resilience vs. Structural Strain

While the 5.0% headline figure suggests a robust economy, the market is increasingly framing China's current state as "resilience supported by a single engine." Export diversification served as a critical buffer throughout 2025, helping to mask underlying domestic weaknesses. However, this reliance on external demand makes the growth outlook uniquely vulnerable to shifting global cycles and mounting tariff risks.

Domestic Demand vs. Industrial Output

The activity mix for the year reveals a stark contrast that continues to worry economists and FX traders alike. Industrial output growth consistently outpaced retail spending, with retail sales increasing at a modest 3.7% pace. This divergence implies that the marginal propensity to consume among Chinese households is not rising fast enough to take the baton should export momentum begin to fade.

For more on how these shifts impact external balances, see our analysis on China’s 2026–2030 consumption pivot toward services.

Why the Q4 Momentum Shift Matters for 2026

In financial markets, direction often matters more than annual averages. Growth in the fourth quarter slowed to 4.5% year-on-year—a three-year low. This loss of momentum at the tail end of the year raises several critical concerns for the start of 2026:

Policy Response: A higher probability of aggressive fiscal or monetary support from Beijing.
Confidence Erosion: The risk that slowing growth translates into labor-market anxiety, further dampening household spending.
Asset Sensitivity: Increased volatility in China-linked assets and the AUD in response to policy headlines.

Global Market Spillovers

The transition of the Chinese economy has significant implications for various asset classes:

Commodities: A pivot toward consumption rather than infrastructure is generally less supportive for industrial metals like copper and iron ore.
Emerging Markets (EM): Softer momentum in the world's second-largest economy often pressures EM assets via trade channels and reduced risk appetite.
Forex (CNH): The offshore Yuan remains a primary proxy for global risk sentiment, especially during periods of data surprises.

Related analysis on trade implications can be found in our note on China growth composition and commodity spillovers.

Conclusion: The Path Forward

China met its 2025 target, but the Q4 slowdown keeps the medium-term narrative intact: the economy remains resilient but requires a stronger household demand engine to remain stable in an increasingly friction-filled global trade environment. Traders should keep a close watch on retail demand figures and credit impulse data throughout the first quarter of 2026 for signs of a turnaround.