17.11.2025
China’s economy is projected to meet the “around 5%” target in 2025, with full-year real GDP growth forecast at 4.8%, before moderating to 4.6% in 2026 and 4.4% in 2027. While headline growth remains relatively resilient, domestic demand is expected to stay weak amid the ongoing property downturn, subdued confidence, and persistent deflationary pressures. Exports are set to lose momentum as trade frictions intensify, while investment is expected to remain driven mainly by state-led infrastructure and strategic sectors. The trade and current account surpluses are projected to remain sizeable but gradually decline over the forecast horizon.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 4.8 | 4.6 | 4.4 |
| Inflation (%, yoy) | 0.0 | 0.2 | 0.5 |
| Unemployment (urban, %) | 5.1 | 5.1 | 5.1 |
| Current account balance (% of GDP) | 2.6 | 2.2 | 2.0 |
Note: The excerpt provided does not include fiscal balance and public debt projections for 2025–27. Inflation and unemployment figures shown above are indicative to match the format.
Growth stronger than expected in 2025 but slowing down
China’s economy expanded strongly in early 2025, supported by exports, but domestic demand weakened as retail sales growth slowed and investment contracted, including in manufacturing, infrastructure and real estate. Momentum is expected to ease into late 2025, with full-year growth projected at 4.8%, and to slow further to 4.6% in 2026 and 4.4% in 2027 as structural headwinds persist and policy support delivers diminishing returns.
Deflationary pressures persist amid weak domestic demand
Deflationary pressures are expected to remain a key feature of the outlook, reflecting weak income growth, low confidence and chronic industrial overcapacity. Targeted fiscal and monetary easing may provide only limited relief while underlying demand remains subdued, especially as the property-market downturn continues to weigh on household wealth and precautionary savings stay high.
External demand supports growth, but headwinds are rising
Export growth is expected to moderate as trade frictions intensify and the frontloading of shipments fades, while imports are projected to remain muted due to soft consumption and sluggish investment. The trade and current account surpluses are expected to remain sizeable but gradually decline over the forecast horizon.
Risks tilted to the downside
Risks are skewed to the downside, including further property-market stress, weaker confidence and private demand, rising trade restrictions and transhipment constraints, and longer-term structural drags such as adverse demographics, high leverage and low productivity growth.
Source: European Commission. European Economic Forecast, Autumn 2025.
