China’s Economy in November 2025: Year-End Review and 2026 Outlook

• China’s November 2025 economy shows momentum easing as the year draws to a close, with the 2026 outlook likely to be characterised by slower headline growth and sharper sectoral divergence.
• Investment remained the main structural drag on 2025 performance: fixed asset investment fell 2.6 percent year-on-year in January–November, with private investment down 5.3 percent and real estate development investment down 15.9 percent, reinforcing the view that the property adjustment is still constraining confidence.
• The external sector continued to provide late-cycle support in 2025, but with clearer constraints heading into 2026: exports rebounded 5.9 percent year-on-year in November to US$330.3 billion, yet shipments to the US fell nearly 29 percent and China’s trade surplus reached about US$1.08 trillion in the first 11 months, increasing global scrutiny even as diversification toward emerging markets continued.

As China releases its final major set of monthly economic data for 2025, November’s figures offer a useful lens through which to assess how the economy has performed over the year, and what challenges are likely to shape the outlook for 2026.

China’s November 2025 data suggest that the economy ended the year with moderating momentum and persistent imbalances, rather than a sharp deterioration. Domestic demand remained soft, with retail sales slowing to their weakest pace since the end of zero-COVID and investment (particularly in real estate) continuing to contract. At the same time, industrial production stayed in expansionary territory, supported by advanced manufacturing and external demand, highlighting the uneven nature of the recovery.

Taken together, the November figures encapsulate the defining characteristics of China’s economic performance in 2025. Growth was sustained not by a broad-based rebound in consumption or private investment, but by relatively resilient production capacity, targeted policy support, and a still-supportive external sector. This configuration has been sufficient to keep full-year growth broadly on track, yet it also underscores the limits of the current growth model.

As the country moves into 2026, the challenge will be less about stabilizing output and more about strengthening domestic demand and restoring confidence, in an environment where policy buffers are narrower and external conditions are likely to be more demanding.

China’s 2025 economy in retrospect: Growth met, but rebalancing stalled

From a headline perspective, 2025 will likely be recorded as a year in which China met its “around 5 percent” growth target without resorting to large-scale stimulus. BBVA Research raised its 2025 GDP forecast to 5.0 percent, citing strong first-half performance and relatively stable third-quarter growth of 4.8 percent year-on-year.

However, beneath the aggregate number, the structure of growth remained fundamentally unbalanced. As BBVA’s supply–demand framework highlights, industrial production and external demand consistently outperformed consumption and private investment, reinforcing an already entrenched supply-side bias.

By late 2025, this imbalance became more visible:

• Industrial production remained expansionary but decelerated;
• Consumption lost momentum as subsidies faded and confidence failed to recover;
• Fixed asset investment contracted outright, dragged down by real estate and weak private-sector capex; and
• Exports continued to provide support, but increasingly at the cost of trade frictions and external pushback.

November’s data should therefore be read as a summary of the year’s internal contradictions.

China’s economy overview in November 2025

Industrial activity: Stable output, but private-sector momentum lags

In November, industrial value-added grew 4.8 percent year-on-year, with cumulative growth of 6.0 percent over January–November, confirming that production capacity remained intact through year-end. Yet the composition of industrial growth underscores why this strength did not translate into broader domestic recovery:

• Manufacturing output grew 4.6 percent, slower than earlier in the year;
• Private industrial enterprises expanded output by only 3.2 percent, lagging state-controlled and shareholding firms; and
• Foreign-invested industrial output rose 3.4 percent, reflecting cautious capacity expansion rather than renewed optimism.

At the sectoral and product level, the familiar divergence persisted. Traditional, property-linked materials such as cement and steel continued to contract, while advanced manufacturing and transport equipment outperformed. Output of new energy vehicles rose 17.0 percent, and electronics, machinery, and transport equipment all recorded solid gains.

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This pattern reveals that China’s supply side remains structurally strong, but increasingly disconnected from domestic demand conditions. Industrial upgrading and export-oriented manufacturing supported output, but they did not generate sufficient spillovers into household income growth or private investment confidence.

Consumption: The weakest link of 2025, but service sales remain resilitent

Consumption was the most consistent drag on growth throughout 2025, and November confirmed that this weakness had not meaningfully reversed.

Retail sales rose only 1.3 percent year-on-year in November, the slowest pace since December 2022. While this headline was partly distorted by an 8.3 percent decline in auto sales, underlying demand remained subdued even after excluding vehicles.

The breakdown reinforces several key themes from the year:

• Service-related consumption was relatively more resilient, with catering revenue up 3.2 percent;
• Online retail remained a structural support, with January–November online sales rising 9.1 percent and accounting for nearly 26 percent of total retail; while
• Rural consumption continued to outperform urban areas, reflecting price sensitivity and lower exposure to property-related wealth effects.

Nevertheless, these pockets of resilience were insufficient to offset broader caution. As both Reuters reporting and BBVA analysis note, fading trade-in subsidies, weak income expectations, and high youth unemployment constrained households’ willingness to spend, even during traditionally strong periods such as Singles’ Day.

In short, 2025 did not deliver the long-anticipated consumption-led rebound. Instead, it reinforced the view that confidence, not liquidity, is the binding constraint on household demand.

Investment: The structural drag that defined the year

If consumption explains why growth felt weak, investment explains why it could not reaccelerate.

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Over January–November 2025, fixed asset investment fell 2.6 percent year-on-year, with private investment down 5.3 percent. The contraction was most severe in the tertiary sector, while manufacturing investment grew only 1.9 percent, despite policy emphasis on industrial upgrading.

For foreign investors, one of the most striking figures was that foreign-invested fixed asset investment fell 14.1 percent over the same period, underscoring cautious capital deployment amid weak demand and regulatory uncertainty.

Real estate remains a central constraint

The property sector remained the single largest drag on the economy in 2025:

• Real estate development investment fell 15.9 percent year-on-year;
• New construction starts declined more than 20 percent;
• Property sales by value fell 11.1 percent; and
• Developer funding declined nearly 12 percent.

While unsold inventory edged down slightly toward year-end, there were no clear signs of a cyclical bottom. Reuters reporting on renewed stress at major developers such as Vanke highlights why property continues to weigh on confidence, local government finances, and banks’ risk appetite.

The IMF’s assessment (cited by Reuters) that resolving property-sector distortions could require resources equivalent to around 5 percent of GDP over several years reinforces the view that this is a medium-term structural adjustment, not a short-term cyclical dip.

Trade performance: Exports become a stabilizer of 2025

Exports remained an important stabilizing force for China’s economy in 2025 and were a key reason policymakers were able to maintain a relatively restrained policy stance through much of the year. Ffront-loading of shipments amid trade uncertainty, diversification toward non-US markets, and resilient global goods demand allowed net exports to make a positive contribution to growth, even as domestic demand lagged.

Trade data for November reinforce this picture of supportive but uneven external momentum. According to figures released by China’s General Administration of Customs (GAC), exports rose 5.9 percent year-on-year in November, reaching US$330.3 billion, rebounding from a 1.1 percent contraction in October. Imports also improved, rising 1.9 percent year-on-year, despite continued weakness in the property sector weighing on investment and consumption.

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Beneath the headline growth, however, trade patterns highlight important structural shifts. Shipments to the United States fell nearly 29 percent year-on-year, marking an eighth consecutive month of double-digit declines, even as exports to Southeast Asia, Latin America, Africa, and the European Union recorded strong growth. As a result, China’s trade surplus for the first 11 months of 2025 surpassed US$1 trillion, reaching approximately US$1.08 trillion, a record level and already exceeding the full-year surplus recorded in 2024.

At the macro and policy level, this widening surplus has become increasingly salient. While a year-long trade truce reached at the Xi–Trump meeting in late October has reduced immediate tariff pressure and eased some export controls, analysts caution that its impact on trade flows may only become visible in the coming months. At the same time, the scale of China’s surplus has intensified scrutiny from major trading partners, reinforcing the limits of relying on exports as the primary buffer against domestic weakness.

At the policy level, this easing momentum has reinforced an ongoing debate rather than triggered a shift in direction. Chinese authorities continue to view exports as a necessary buffer in the short term, but are increasingly aware of the constraints surrounding export-led stabilization. Meanwhile, growing scrutiny from major trading partners over China’s large trade surplus, alongside renewed tariff threats and industrial-policy pushback in Europe, North America, and parts of Latin America. These developments do not yet amount to a decisive external shock, but they do narrow the room for exports to carry growth on their own.

Policy stance defining China’s economy ins 2025

One of the most consequential features of 2025 was what policymakers chose not to do.

Despite weak consumption and contracting investment, Beijing refrained from deploying large-scale, debt-driven stimulus. Instead, policy focused on:

• Targeted support for manufacturing, green industries, and strategic technologies;
• Incremental easing in housing policies to prevent disorderly adjustment;
• Limited consumption incentives with diminishing marginal effects.

This restraint could be interpreted as intentional: policymakers appear confident that growth targets can be met without sacrificing longer-term priorities, particularly deleveraging, industrial upgrading, and financial stability.

This approach is consistent with the outline of the 15th Five-Year Plan (2026–2030) approved at the Fourth Plenum, which continues to emphasize technology self-sufficiency, security, and supply-side modernization, while giving comparatively less operational detail on demand-side reform.

China’s economy outlook for 2026

Most baseline forecasts still point to a step-down in growth in 2026, with BBVA’s baseline at around 4.5 percent, and other major institutions similarly cautious. But the more useful question for 2026 is less the precise growth number than what China prioritizes as trade-offs become harder to avoid.

As the Center for China Analysis argues, China’s trajectory is rarely linear: the system is neither on the verge of collapse nor so ascendant as to defy gravity. The challenge is managing contradictions, between security and development, state direction and private dynamism, and long-term upgrading goals and near-term livelihood pressures. 2026 raises these tensions because it marks the start of the 15th Five-Year Plan and the runway to the 2027 Party Congress, when political incentives tend to favor stability, control, and headline performance, yet economic conditions increasingly demand confidence repair and a firmer domestic-demand base.

The risk map is real, but not one-directional

Risks in 2026 remain skewed to the downside, but they are better understood as interlocking constraints rather than discrete shocks.

• Domestic demand and confidence: The property adjustment is still unresolved and continues to weigh on household wealth perceptions and precautionary saving. Weak private investment signals a deeper confidence problem: firms are not simply short of liquidity, they are cautious on returns, enforcement consistency, and demand visibility. This aligns with CCA’s emphasis on whether the central government can reconcile private-sector vitality with a state-led innovation model.
• External conditions: Exports should remain supportive, particularly in advanced manufacturing, but 2025’s record surplus dynamics create political and commercial constraints abroad. This speaks to whether China and the United States can find a more durable equilibrium on trade and technology, or whether “stability” remains a sequence of rolling truces and episodic flare-ups.
• Policy execution risk: The Chinese government has signaled a stronger emphasis on “boosting consumption,” yet the harder test is whether this becomes institutional (through income distribution, social protection, and credible confidence repair) or remains additive to a supply-side playbook that still leans heavily on industrial upgrading. This can be seen as the pivotal dilemma: can China truly pivot toward a consumption-led economy, and is it willing to accept the slower, more politically complex growth path that genuine rebalancing implies?

In this context, the central 2026 watchpoint is not “stimulus or no stimulus,” but whether policy shifts from managing weakness to rebuilding domestic demand drivers, and whether those shifts are strong enough to change household and private-firm behavior rather than simply supporting output.

See also: CEWC 2025: China Emphasizes Boosting Domestic Consumption, Proactive Fiscal Policy in 2026

What this means for businesses and investors

For foreign firms, the end of 2025 increasingly looks like a managed transition rather than a sharp inflection point. Heading into 2026, China’s operating environment is likely to be characterised by slower headline growth, pronounced sectoral divergence, and heightened sensitivity to policy execution and regulatory signalling, rather than systemic macroeconomic instability.

The key implication is that opportunity will continue to sit at the intersection of policy intent and underlying demand, and these do not always align cleanly. Advanced manufacturing, high-tech equipment, and selected green and innovation-linked industries remain relatively well supported, with industrial upgrading and export competitiveness still acting as stabilising forces. China is likely to continue gaining share in segments of global goods trade, particularly in higher value-added categories, even as domestic investment growth is deliberately restrained.

By contrast, domestic demand will remain uneven. The cooling seen in consumer spending reflects not a collapse in consumption, but a rebalancing away from policy-supported durable goods toward services and discretionary everyday items. Growth in consumer-facing sectors will therefore be more selective, with scale and sustainability hinging on whether household confidence improves and whether policy support evolves from time-limited stimulus measures toward more durable income, welfare, and services-oriented support.

For management teams, 2026 therefore becomes a year of calibration rather than expansion at all costs:

• Treat the market as structurally two-speed, with upgrading and export-linked manufacturing, services consumption, and selected innovation sectors outperforming, while property-linked and policy-dependent discretionary categories remain under pressure.
• Plan for policy-driven volatility, including shifts in investment priorities, regulatory enforcement cycles, and geopolitical spillovers, even if aggregate growth outcomes remain broadly stable.
• Compete on execution rather than narrative, with distribution efficiency, cost discipline, compliance resilience, and realistic demand assumptions outweighing headline growth stories.

As 2026 begins, China’s central challenge is no longer simply whether it can meet a numerical growth target, but whether it can sustain domestic demand momentum while continuing to unwind excess capacity, local government leverage, and property-sector dependence. How the government manages these trade-offs (between short-term stabilisation and longer-term rebalancing) will shape not only the 2026 growth profile, but also the credibility of China’s broader economic transition under the 15th Five-Year Plan.

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