China’s economy had a mixed start this year, with industrial output slowing while retail sales showed slight growth. Policymakers are facing increasing pressure from U.S. trade tariffs, adding new challenges to economic recovery.
According to data from the National Bureau of Statistics (NBS), industrial output grew 5.9% year-on-year in the first two months of 2025, down from 6.2% in December. However, this was still better than the 5.3% growth expected in a Reuters poll of 26 analysts.
Retail sales, a key measure of consumer spending, increased by 4.0% in the January-February period, improving from a 3.7% rise in December. This marked the fastest growth rate since November 2024 and met analysts’ expectations.
Earlier this month, China also reported weaker-than-expected export and inflation figures. The latest wave of U.S. tariffs on key trading partners, including China, is disrupting global trade and increasing the need for more policy support.
Despite these challenges, China’s top leaders have set an economic growth target of “around 5%” for 2025. However, analysts believe this will be difficult to achieve due to sluggish household demand, ongoing problems in the property sector, and export pressures.
“The data suggests the economy has some momentum in the early months of the year, even though deflation remains a concern,” said Tianchen Xu, senior economist at the Economist Intelligence Unit.
China’s Property Slump Deepens in February Despite Policy Support
China’s property market remained under pressure in February, with key indicators showing continued weakness. Official data revealed declines in property prices, investment, and sales, suggesting that government measures and stimulus promises have done little to revive demand. New home prices fell by 0.1% from the previous month, marking the first decline after two months of relative stability. On a year-on-year basis, prices dropped 4.8%, slightly better than the 5.0% decline in January. However, analysts caution that these figures may not fully reflect actual market conditions, as local governments often impose informal price controls to prevent sharper drops.
Broad-Based Decline Raises Concerns Over Market Stability
The downturn extended to resale home prices, which fell across China’s tier-one, tier-two, and tier-three cities, both on a monthly and yearly basis. This broad-based decline signals deep-rooted challenges in the real estate sector.
ING stressed that February’s data shows the need for continued government support. They warned that officials should not slow down their efforts to stabilize the market because weak demand and falling prices suggest the property downturn is not over yet.
China’s Economy Resilient, But Faces Growing External Challenges; 2025 Growth Target Remains Difficult
A spokesperson for China’s Statistics Bureau has stated that while China’s economy remains strong, the external environment is becoming more complex and challenging. Achieving the 2025 growth target will not be easy.
Despite signs of stabilization, the property market still faces some pressures. Consumer prices are expected to improve further, and economic performance in the first quarter is anticipated to be steady.
The employment situation remains mostly stable, although the rise in the jobless rate in February is still within normal limits. Stabilizing and expanding employment will continue to require significant effort.
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