China has hit its 5% GDP growth target for 2025, overcoming global trade disruptions and a persistent domestic property crisis, but experts warn that underlying challenges continue to threaten its long-term stability.
In an impressive display of economic resilience, China managed to meet its annual growth forecast, with the National Bureau of Statistics revealing a 5% increase in GDP for the year. However, growth slowed significantly to 4.5% in the final quarter, raising concerns about the sustainability of the country’s economic momentum.
Exports Drive Growth as Domestic Struggles Linger
Despite a host of external challenges, including the ongoing US-China trade war and rising global protectionism, China’s export sector proved a critical lifeline. Exports surged, contributing to a record trade surplus of over $1.2 trillion (approximately KES 156 trillion). This figure alone is more than 10 times the entire GDP of Kenya, underscoring China’s pivotal role in global manufacturing. From electric vehicles to solar panels, Chinese factories kept supply chains moving and industrial hubs in Guangdong active.
“The world is still buying what China is selling,” commented Lynn Song, an economic analyst. “But the reliance on external demand is risky, especially as trade barriers continue to rise worldwide.” The heavy reliance on exports, however, exposes China to risks if global trade conditions continue to deteriorate.
Domestic Economy Faces Major Hurdles
Back home, China’s economy continues to show signs of strain. The property market remains one of the most pressing concerns, with real estate investment plummeting by 17.2%. This sharp decline further weakens household wealth and raises doubts about the recovery of the sector. Meanwhile, consumer confidence remains low, as retail sales growth stagnates and citizens choose savings over spending in the face of economic uncertainty.
The slowdown in domestic consumption is a stark reminder that, despite the export boom, China’s internal economic issues are far from resolved. Experts suggest that the sluggish recovery in the property sector, combined with caution from Chinese consumers, may weigh heavily on future growth.
The country’s leadership is well aware of these challenges. As China pivots toward 2026, the focus is shifting toward new sectors, including artificial intelligence and green technology, in a bid to drive future economic growth. These “new productive forces” are central to Beijing’s strategy for navigating its evolving economic landscape.
Implications for Kenya and the Global Market
The effects of China’s economic performance extend beyond its borders, particularly for Kenya. On one hand, a slower Chinese economy could reduce demand for commodities from Africa, potentially impacting exports. On the other hand, the influx of affordable Chinese-manufactured goods offers Kenyan consumers lower-priced imports, though this has led to increased competition for local industries.
As China moves into 2026, the economic giant may be shifting gears, but it remains to be seen whether its new strategies will be enough to offset its domestic weaknesses and the pressures from a volatile global trade environment.
