China's economy expanded by 5% last year, meeting Beijing's official target, driven by a record trade surplus despite headwinds from U.S. tariffs and domestic economic challenges. The world's second-largest economy achieved this growth despite a slowdown to 4.5% in the final three months of 2025, according to official figures released last week. The record trade surplus was the largest ever recorded, according to the report.

The past year presented significant hurdles for China, including sluggish domestic spending, a persistent property crisis, and disruptions stemming from U.S. President Donald Trump's tariff policies. These factors contributed to what experts describe as a "two-speed economy," where manufacturing and exports are robust while consumer spending remains cautious and the real estate market struggles.

Analysts have pointed out the divergence between the strong export performance and weaker domestic indicators. While official figures indicate the growth target was met, some experts question the accuracy of the data, citing weak investment and consumer spending as reasons for skepticism.

Zichun Huang, China economist at Capital Economics, suggested that the official numbers might be overstating the actual pace of economic expansion. "We think growth is weaker than official figures suggest," Huang said, estimating that the official figures "overstate the pace of economic expansion" by at least 1.5 percentage points.

The reliance on exports to achieve the growth target raises concerns about the sustainability of this model, particularly given the ongoing trade tensions and potential for further disruptions in the global economy. The property crisis, in particular, continues to be a drag on the economy, with concerns about its potential impact on the financial system.

Looking ahead, the Chinese government faces the challenge of rebalancing the economy, shifting from an export-led model to one driven more by domestic consumption. Addressing the property crisis and boosting consumer confidence will be crucial to achieving more sustainable and balanced growth in the coming years. The government is expected to announce new measures aimed at stimulating domestic demand in the coming months.