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China: Economic growth ebbs in the third quarter of 2025
GDP reading: China’s GDP increased 4.8% in annual terms in Q3, following a 5.2% expansion in the prior quarter. Q3’s reading was the weakest in a year, and in line with market expectations and the government’s target of around 5% growth for 2025 as a whole. Exports and financial services were key factors supporting the economy, while consumer spending, a property downturn and manufacturing investment were drags, the latter linked partly to the anti-involution campaign, deflation, excessive overcapacity and trade tensions.
Drivers: Compared to the prior period’s data, figures in Q3 worsened for the services sector (+5.4% on a year-on-year basis vs +5.7% in Q2) and the industrial sector (+4.2% vs +4.8% in Q2). In contrast, the reading for the agricultural sector improved in Q3 (+4.0% vs +3.8% in Q2).
In seasonally adjusted quarter-on-quarter terms, economic output grew 1.1% in Q3, following 1.0% growth in the previous quarter.
Panelist insight: On policy options to boost the economy, Nomura analysts said:
“After the 4th plenum, we expect Beijing to refocus on short-term growth headwinds. In our view, Beijing’s best strategy is to resist the temptation to fuel the stock markets by avoiding too-high-profile monetary measures in the near term, remaining vigilant by avoiding contractionary policies, cleaning up the property mess, and addressing some deep-rooted problems such as the unequal social security system.”
