Export Diversification Drives China's Economy to Meet Annual Target Despite Weak Domestic Demand

Beijing | EcoPulse24

China's economy achieved its government-set annual growth target for 2025, bolstered by strong export momentum and a strategic shift by companies toward alternative markets to counteract weak domestic consumption and U.S. tariff pressures. The overall performance was solid across sectors, with services and advanced industries leading growth, while a decline in fixed asset investment reflected cautious household spending and challenges from surplus production capacity.

In trade, total goods trade reached 45.47 trillion yuan, with exports rising 6.1% and imports increasing by a modest 0.5%. Private enterprises accounted for 57.3% of overall trade activity, indicating a broader export base and greater diversification toward Europe and Latin America. This trade dynamism partially offset slower domestic demand and the impact of tariffs.

By sector, the primary sector expanded by 3.9%, the secondary sector by 4.5%, and services led with 5.4% growth, driven by information technology and software (+11.1%) and leasing and business services (+10.3%). Industrial value-added rose 5.9%, supported by equipment manufacturing (+9.2%) and high-tech manufacturing (+9.4%). Retail sales grew 3.7%, with e-commerce performing strongly (+8.6%), while fixed asset investment fell 3.8%.

Analysis
Trend analysis indicates a growing reliance on the flexibility of foreign trade and the leadership of services and technology to offset weak domestic demand. Sustaining this balance will require a broader recovery in consumer confidence and an improved investment environment, while the future path hinges on policy effectiveness in stimulating demand without exacerbating overcapacity imbalances.