Key Points
- President Xi Jinping announced China will meet its 5% economic growth target for 2025.
- He called the past year “extraordinary” and praised the economy’s resilience.
- Booming exports were the main driver of growth, not domestic spending.
- The property market remains a significant challenge, with new-home prices continuing to decline.
President Xi Jinping declared that China’s economy is on track to hit its 5% growth target for 2025. In a speech to the country’s top political advisory group, he described the past year as “extraordinary” and praised the economy’s “strong resilience and vitality.” He noted that China’s growth rate will remain among the highest among the world’s major economies.
While the overall growth number appears favorable, the year was mixed. Booming exports were the main reason the economy stayed on track. Chinese manufacturers have been moving up the value chain, making more advanced and expensive products. This success allowed the government to avoid massive stimulus packages to sustain the economy.
However, there are some serious warning signs. Investment in the country is on pace to shrink for the first time since 1998. At the same time, retail sales have been very weak, growing at their slowest pace since the onset of the pandemic.
The principal problem remains the property market. New-home prices continued to fall in November, indicating that the real estate crisis is far from over.
President Xi has hinted that he is willing to accept slower growth in some areas. He recently said that China needs to crack down on “reckless” projects, a clear sign that he is more interested in the quality of growth rather than just hitting a big number. This shift in focus suggests that Beijing is trying to move away from its old model of relying on construction and investment to drive the economy.
For now, the government is celebrating a year of solid performance despite the challenges. The 5% growth figure indicates that China’s massive export machine remains powerful enough to sustain economic growth, even as other parts of the economy struggle.
