China hits 2025 GDP growth target on export boom, but can't shake domestic chill

BEIJING, Jan 19 (Reuters) - China's system grew 5.0% past year, gathering the government's people by seizing a grounds stock of planetary request for goods to offset anemic home consumption, a strategy that blunted the interaction of U.S. tariffs but is progressively hard to sustain.

Since its spot assemblage clang successful 2021, Beijing has guided resources towards the concern analyzable alternatively ​than consumers to conscionable ambitious maturation targets, creating endemic accumulation overcapacity and forcing factories to look for buyers abroad.

Last year, China's inroads into planetary markets went further than ever before, starring to ‌a grounds commercialized surplus of $1.2 trillion, 20% higher than successful 2024 and equivalent to the size of a apical 20 economy, specified arsenic Saudi Arabia.

While shipments to the U.S. fell by a fifth, they roseate sharply to the remainder of the satellite arsenic producers ‌conquered caller markets to insulate themselves from U.S. President Donald Trump's assertive tariff policies to antagonistic Beijing's situation to American hegemony.

"We're doing good successful Europe and Latin America and we don't request that market," said Dave Fong, who co-owns 3 factories successful confederate China making everything from schoolhouse bags to climbing cogwheel and concern machinery. About 15% of his orders utilized to travel from the U.S., but that's present down to a trickle.

CHINA'S DOMESTIC ECONOMY ENTERS 'COLD WINTER'

But the occurrence of China's export-oriented manufacturers contrasts with persistent weakness successful the domestic-focused parts of the economy. Monday's information underscored that divergence: concern output roseate 5.9% successful 2025, outpacing retail sales' 3.7% growth, portion spot concern slumped by ⁠17.2%.

And unless Beijing is capable to redirect resources towards consumers and assistance ‌the sectors depending connected Chinese spending astatine home, aboriginal economical maturation risks slowing sharply, analysts say. While China is expected to people a astir 5% gait again this year, a Reuters canvass predicted 2026 maturation astatine 4.5%.

Relying connected exports for maturation successful the longer tally is hardly an option. If China's commercialized surplus were to turn ‍every twelvemonth astatine the aforesaid complaint it did successful 2025, it would lucifer the size of France's astir $3 trillion system successful 2030 and Germany's $5 trillion output successful 2033, Reuters calculations show.

"It’s hard to ideate however the commercialized surplus could proceed to grow astatine this clip indefinitely into the future, if lone due to the fact that that would incur a wider protectionist backlash abroad," said Christopher Beddor, economist astatine Gavekal Dragonomics.