China has announced that its economy grew by 5% in 2025, meeting the government’s target, while simultaneously reporting a record low birth rate that underscores deepening demographic challenges, all amid persistent trade tensions with the United States.
On Monday, China’s National Bureau of Statistics released data showing the economy expanded by 5% last year, aligning with Beijing’s official goal. This growth was buoyed by a surge in exports, which led to a record trade surplus of $1.2 trillion, despite tariffs imposed by US President Donald Trump. However, the fourth quarter saw a slowdown to 4.5% growth, the weakest since the post-pandemic reopening, highlighting underlying economic fragility.
Concurrently, the birth rate dropped to 5.63 per 1,000 people in 2025, the lowest since records began in 1949, with only 7.92 million babies born. This contributed to a population decline of 3.39 million, marking the fourth consecutive year of shrinkage. The falling birth rate outpaced deaths, reducing the total population to approximately 1.4 billion, deepening concerns over China’s aging society.
The demographic shift presents a stark challenge for China’s future economic vitality. With the population aged over 60 now comprising 23% of the total and projected to reach half by 2100, according to UN estimates, the shrinking labor force and growing pension burdens could hamper long-term growth. Efforts to reverse the trend, including cash bonuses for families and extended maternity leave, have so far failed to stem the decline.
Economists point to a “two-speed economy,” where robust manufacturing and exports prop up growth while domestic consumption remains weak. Retail sales grew a mere 0.9% in December, the slowest in three years, and the property sector continues to slump, with real estate investment falling 17.2% in 2025. This overreliance on exports makes China vulnerable to global trade tensions and policy shifts.
Analysts question the accuracy of China’s GDP figures, with some estimating actual growth between 2.5% and 3% for 2025, suggesting official data may overstate economic health. The government has acknowledged challenges like “strong supply and weak demand” but remains optimistic about maintaining stable growth momentum in the coming year.
Looking ahead, Beijing faces a delicate balancing act: stimulating domestic demand without exacerbating debt, while navigating an uncertain international trade environment. The government is expected to set new growth targets in March and unveil a five-year economic blueprint, with forecasts predicting slower expansion of around 4.4% in 2026.
In conclusion, China’s ability to sustain economic resilience will depend on addressing both immediate headwinds and long-term demographic pressures. As young people grapple with high costs and job insecurity, reversing birth rate declines remains a formidable task, with implications for global economic stability and China’s geopolitical ambitions.
