According to new analysis, China’s economy is growing significantly slower than officially announced. Falling investment is bringing growth below the government target.
December 24, 2025, 06:30December 24, 2025, 06:30
According to a study, China’s economy will have grown by 2.5 to three percent in 2025, only about half as much as stated by the government in Beijing. The reason was a collapse in fixed investment in the second half of the year, according to a report published on Monday by the US think tank Rhodium Group.
At its meeting in March, China’s government is likely to announce that it has achieved the official growth target of “around five percent”. According to the report, the unmeasured demand gap is around half a trillion dollars. China’s statistics office did not immediately respond to a request for comment.
Xi Jinping’s government should not be too particular about China’s economic growth.Image: keystone
The authors point out a contradiction in the official data. Although these showed a decline in fixed investment, gross capital formation is still said to have made a positive contribution to gross domestic product (GDP). “The story of China’s economic growth in 2025 depends on whether investment only declined or collapsed in the second half of the year,” the report says.
“History knows no examples of economies that have recorded real GDP growth of five percent while, like China, facing persistent deflation for ten consecutive quarters. We doubt that China is the first.”
“Always in the same direction”
After a strong start to the year with an increase of 4.2 percent in the first quarter to June, fixed investment in roads, railways, apartments and factories slipped into the red and fell by 12.2 percent by October. According to the latest official data, they fell by 2.6 percent from January to November, mainly due to a 15.9 percent decline in real estate investment.
For 2026, the Rhodium Group estimates China’s economic growth to be only 1 to 2.5 percent. This is well below the International Monetary Fund (IMF) forecast of 4.5 percent. “The miscalculation for China’s economy has been going on for too long,” said the think tank.
“And it always goes in the same direction of exaggeration.”
Sources used:
- Reuters news agency