China's economy expanded 1.2% in the fourth quarter, slightly exceeding forecasts for 1.1% growth. The annual GDP increase of 4.5% matched expectations but was weaker than the prior quarter's 4.8%. The data brought full-year growth to exactly 5%, the government's target for a third consecutive year.

Beijing's stimulus measures helped the economy navigate persistent headwinds, including U.S. trade tensions. Tariffs remain around 50%, with Washington threatening more over Chinese purchases of Russian oil. Manufacturing and exports stayed key drivers, with overseas sales to Europe and Asia offsetting softer U.S. demand.

However, signs of fading momentum appeared late in 2025. Fixed asset investment shrank for a fourth straight month, contracting 3.8% and missing forecasts. This underscores ongoing weak business sentiment. Private consumption subsidies provided support, but their impact is waning as the year closed.

Looking ahead, policymakers face pressure to sustain growth without further inflating debt. The mixed data suggests the recovery remains fragile, heavily reliant on state support. Markets will watch for more targeted measures to boost domestic demand and stabilize investment in 2026.