China fourth-quarter growth slows to 4.5%, weakest in nearly three years as consumption misses forecasts

Economic Growth - China's GDP grew by 4.5% in Q4 2025, a slowdown from 4.8% in Q3, marking the weakest growth since Q1 2023 [2] - Full-year economic output for 2025 was 5%, meeting the official target of around 5% despite challenges [2] Domestic Consumption and Investment - Retail sales in December grew by 0.9% year-on-year, missing the forecast of 1.2% and slowing from 1.3% in November [3] - Fixed-asset investment contracted by 3.8% in 2025, worse than the expected 3% drop [3] - Weak household consumption and plunging investment have increased reliance on exports for growth, which is unsustainable [6] Trade and Exports - China reported a record trade surplus of nearly $1.2 trillion in 2025, driven by increased exports to non-U.S. markets [4] - Economists expect China's exports to grow around 3% in 2026, despite potential challenges from tariff rates and currency appreciation [5] Monetary Policy and Stimulus - The People's Bank of China announced credit-easing measures, including a 25-basis-point cut in rates and increased lending quotas for key sectors [9] - Economists at Goldman Sachs predict further cuts to the reserve requirement ratio and policy rate in Q1 2026 [10] Inflation and Price Trends - Consumer inflation accelerated to 0.8% in December, the fastest pace in nearly three years, while producer prices dropped by 1.9% [6] - The GDP deflator has remained negative since 2023 and is expected to fall by 0.5% in 2026, indicating persistent deflationary pressures [7]