Understanding China’s Key Economy Indicators for Q3 2025

• China’s economy in Q3 2025 rose 4.8 percent year on year (1.1 percent quarter-on-quarter), keeping the “around 5 percent” annual target within reach, but marking the weakest pace in a year.
• High-tech manufacturing/exports and a widening trade surplus are propping up growth, while domestic demand is soft and the property downturn continues to weigh on spending and investment.
• Nominal GDP up only 3.7 percent year on year, signaling weak pricing power and pressure on profits, wages, and fiscal revenues, implying the need for stronger demand-side support to lift confidence.

China’s economy held steady through the third quarter of 2025, though the pace of recovery continued to moderate amid persistent pressure from the property downturn and subdued consumer sentiment. Gross domestic product (GDP)  expanded by 4.8 percent year-on-year in the July–September period, matching expectations and marking the weakest pace in a year, down from 5.2 percent in the second quarter. On a quarter-on-quarter basis, growth reached 1.1 percent, broadly maintaining the momentum recorded in the spring.

For the first three quarters of 2025, China’s GDP totaled RMB 101,503.6 billion (approximately US$14.3 trillion), up 5.2 percent year-on-year, keeping the government’s annual growth target of “around 5 percent” within reach. Yet, behind the headline figures, the composition of growth continued to shift. Robust exports and ongoing investment in high-tech manufacturing offset weakening retail sales and an extended contraction in the real estate sector.

The property slump has deepened its drag on both household wealth and consumption. Apartment prices in several major cities have fallen by as much as 40 percent from their 2021 peaks, undermining confidence and leaving consumers increasingly cautious. Retail sales rose just 3.0 percent year-on-year in September (the slowest pace since late 2024) indicating that households remain reluctant to spend despite targeted subsidies for big-ticket purchases such as electric vehicles, appliances, and smartphones.

Meanwhile, industrial production and exports provided key pillars of support. Factories benefited from strong overseas demand, particularly in developing markets, and rising investment in equipment and high-tech manufacturing. The country’s trade surplus continued to widen, rising over 12 percent in the third quarter, and is on track to surpass US$1 trillion for the year, a record high. Still, escalating trade tensions and higher tariffs from major economies, notably the United States and the European Union, pose growing risks to external demand.

Policymakers have so far maintained a cautious stance on stimulus, relying on targeted fiscal tools, subsidies, and infrastructure spending rather than broad-based measures. Economists expect China to roll out additional, focused support to reinforce domestic demand in the coming months, with particular attention to housing and household consumption.

While the National Bureau of Statistics (NBS) described the economy as showing “strong resilience and vitality,” the data reveal an uneven recovery, resilient in output and exports, yet constrained by weak consumer confidence and ongoing structural adjustment.

Industrial output remains strong, led by high-tech and equipment

China’s factories showed solid growth through Q3. The value added of industrial enterprises above designated size rose 6.2 percent year-on-year between January and September. By sub-sector, manufacturing output climbed 6.8 percent, bolstered by a 9.7 percent jump in equipment manufacturing and a 9.6 percent surge in high-tech manufacturing.

Among ownership types, private enterprises (+6.1 percent) and share-holding firms (+6.7 percent) outpaced state-owned (+4.6 percent) and foreign-funded enterprises (+4.1 percent), reflecting the dynamism of China’s private sector.

Output of cutting-edge products was especially strong, and all saw double- or triple-digit gains, in particular:

• 3D printers: Grew by 40.5 percent;
• Industrial robots: Increased by 29.8 percent; and
• New-energy vehicles (NEVs): Rose by 29.7 percent.

In September 2025, industrial production accelerated further: output grew 6.5 percent year-on-year (against 5–6 percent earlier in the quarter), helped by robust factory activity and a slight uptick in the official purchasing managers’ index (PMI), which stood at 49.8 in September (A PMI just below 50 percent indicates near-stable manufacturing activity).

All told, China’s manufacturing sector has remained a bright spot, with expansion in high-tech and investment goods offsetting weakness elsewhere. However, business surveys and anecdotal reports show that firms are coping with weak domestic orders by cutting prices and margins.

Services sector rebounds, led by IT and business services

China’s services industries continued a broad rebound. In Q1–Q3, value added of the services sector grew 5.4 percent year-on-year. The fastest-growing segments included:

• Information transmission, software and IT services: Grew by 11.2 percent;
• Leasing and business services: Rose by 9.2 percent;
• Transportation and postal services: Increased by 5.8 percent; and
• Wholesale/retail trade: Grew by 5.6 percent.

These reflect continued demand for digital services, logistics, and trade-related services.

In September, services output was firming up: the official Index of Services Production rose 5.6 percent year-on-year. Analyzed by specific segment, within the Index of Services Production:

• IT and software output: Jumped by 12.8 percent;
• Finance services: Grew by 7.8 percent;
• Leasing/business services: Rose by 8.7 percent; and
• Transportation services: Increased by 5.7 percent.

Overall, the revenue of large service-sector firms (above designated size) was up 7.7 percent in the first nine months of the year. The business activity PMI for services was 50.1 in September, slightly above the 50.0 expansion threshold, and the expectation index was a strong 56.3, signaling optimism about future growth. In sum, modern services (especially in tech and business support) have outpaced the broader economy, helping to cushion the slowdown in older industries.

Retail sales continue recovering, buoyed by tech-driven demand

Consumer spending displayed a more encouraging trend compared to the beginning of 2025, yet overall sentiment among households remained cautious. Between January and September, total retail sales of consumer goods reached RMB 36.58 trillion (US$5.13 trillion), marking a 4.5 percent increase year-on-year. While this represents a steady improvement from the first half of the year, it also highlights the gradual nature of the recovery in domestic demand.

Sales of goods excluding food items grew by 4.6 percent, supported by stronger purchases of household electronics, furniture, and personal items. Meanwhile, catering services (often viewed as a proxy for consumer confidence) expanded by a more modest 3.3 percent. The divergence between goods and services consumption underscores a lingering sense of prudence among consumers, who continue to prioritize essential and practical spending over leisure-related activities.

Growth was strongest in necessities and higher-end goods:

• Grain, oil and food jumped by 10.4 percent;
• Sports and recreation articles increased by 19.6 percent; and
• Gold and jewelry: Rose by 11.5 percent.

Trade-in and consumer subsidy programs have provided a noticeable boost to durable goods consumption, signaling that policy incentives are beginning to filter through to household spending. Retail sales of home appliances and audio-visual equipment surged by 25.3 percent, while furniture purchases rose 21.3 percent and sales of communication devices (such as smartphones and laptops) increased by 20.5 percent. These gains suggest that Chinese consumers are selectively upgrading big-ticket items when financial incentives are available, even as broader sentiment remains restrained.

Online consumption continued to strengthen as well. E-commerce platforms recorded total sales of RMB 11,283.0 billion (US$1,545.62 billion) between January and September, up 9.8 percent year-on-year. Of this, physical goods accounted for RMB 9.15 trillion (US$1.28 trillion), rising 6.5 percent and making up roughly a quarter of all retail sales. This expanding digital share, once again, hgihlights how online channels are increasingly compensating for softer performance among traditional retailers.

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September data provided further signs of stabilization. Overall retail sales rose 3.0 percent year-on-year (an improvement from around 1.9 percent in August) driven by strong momentum in consumer electronics and household goods. Home appliances, communication devices, and cultural or office supplies all recorded double-digit growth. Even the automotive sector, which had been a drag for much of the year, showed tentative signs of recovery.

Meanwhile, services-related consumption, such as travel, dining, and entertainment, grew by 5.2 percent in the first nine months, reflecting a gradual normalization of activity despite lingering caution among households.

Still, analysts caution that consumer confidence is fragile. With housing prices falling and real incomes pressured, Chinese shoppers remain cautious. The government has recently rolled out subsidy programs (for instance, electronics trade-in) to boost spending. Going forward, domestic consumption will need further support to sustain growth.

Foreign trade: A stabilizing pillar under external pressures

Foreign trade continued to act as a crucial stabilizer for China’s economy in the third quarter of 2025, though its growing dominance also highlights structural vulnerabilities. In RMB terms, from January to September, the total value of imports and exports reached RMB 33.61 trillion (US$4,603.81 billion), up 4.0 percent year-on-year. Exports rose 7.1 percent to RMB 19.95 trillion (US$2,732.88 billion), while imports dipped slightly by 0.2 percent, leaving China with another record trade surplus.

High-tech and mechanical products once again drove export performance. Shipments of mechanical and electrical goods increased 9.6 percent, accounting for over 60 percent of total exports. The so-called “new three” industries (lithium-ion batteries, solar cells, and new energy vehicles) also posted double-digit growth, demonstrating China’s shift toward higher-value manufacturing. Trade with Belt and Road Initiative (BRI) partners expanded 6.2 percent, reflecting deeper ties with developing markets amid Western trade frictions.

September data showed a noticeable rebound: total trade rose 8.0 percent year-on-year; with exports up 8.4 percent, and imports up 7.5 percent, signaling short-term resilience despite mounting global uncertainty. The NBS noted that goods trade in Q3 increased 6.0 percent year-on-year, contributing significantly to GDP growth even as domestic consumption remained soft.

However, the broader context points to mounting strain. As Reuters observed, China’s growth is now “heavily reliant on the humming of its exporting factories”, a dependence that is increasingly difficult to sustain amid intensifying trade tensions and sluggish global demand. Exports to the United States fell 27 percent year-on-year in September, reflecting the impact of Washington’s escalating tariff regime, including a proposed 100 percent tariff on all Chinese imports set to take effect in November. At the same time, exports to the European Union, Southeast Asia, and Africa rose sharply (by 14 percent, 15.6 percent, and 56.4 percent, respectively) highlighting China’s efforts to diversify away from Western markets.

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This pivot, while cushioning short-term shocks, has come at a cost. Fierce price competition in emerging markets has eroded profit margins for many exporters, forcing them to cut wages or jobs to stay afloat. The dynamic underscores the paradox of China’s export-led stability: it sustains GDP growth but deepens domestic weakness by squeezing industrial profitability and household income.

Policymakers remain keenly aware of these risks. The NBS has warned that “unilateralism and protectionism have been rampant, increasing instability and uncertainty in global trade.” China’s near-term focus is on preserving export competitiveness while accelerating industrial upgrading through automation and digitalization.

Investment trends and property market strains

Investment activity in the first three quarters of 2025 reflected a cautious but uneven recovery, shaped by policy-driven industrial growth on one side and persistent real estate weakness on the other. Fixed-asset investment (excluding rural households) totaled RMB 37.15 trillion (US$5.21 trillion), edging down 0.5 percent year-on-year. When excluding real estate, however, investment increased 3.0 percent, suggesting that capital continued to flow into manufacturing, infrastructure, and high-tech sectors despite broader economic headwinds.

Infrastructure investment rose 1.1 percent, supported by ongoing public works and transport projects, while manufacturing investment climbed 4.0 percent, underpinned by the government’s focus on industrial upgrading and equipment renewal. By sector:

• Investment in the primary industry rose 4.6 percent;
• The secondary industry expanded 6.3 percent; and
• The tertiary industry contracted 4.3 percent.

Private investment, meanwhile, declined 3.1 percent year-on-year, though it grew 2.1 percent when real estate development was excluded, an indication that private sector confidence remains fragile but responsive to policy incentives outside the property market. Within high-tech industries, investment surged in information services (+33.1 percent), aerospace vehicle and equipment manufacturing (+20.6 percent), and computer and office device manufacturing (+7.4 percent), underscoring the government’s efforts to foster innovation and strengthen self-reliance in strategic sectors.

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The property sector, however, continued to weigh heavily on overall investment sentiment. Real estate development investment plunged 13.9 percent year-on-year in the first three quarters, while sales of newly built commercial housing fell 7.9 percent in value and 5.5 percent in floor area. Moreover, home prices dropped at the fastest pace in nearly a year in September, signaling that the market correction is far from over.

The protracted slump has eroded household wealth and dragged down demand in upstream industries such as construction materials and steel, while local governments, once reliant on land sale, remain constrained by weaker fiscal revenues.

How to read China’s Q3 2025 economic performance indicators

Despite its measured pace, China’s third-quarter performance reinforces the view of an economy that is stable but lacking momentum. The headline growth rate of 4.8 percent suggests that China remains broadly on track to meet its annual target, yet the underlying dynamics continue to reveal stress points, particularly in prices and private demand. Nominal GDP expanded by only 3.7 percent year-on-year, signaling persistent deflationary pressure and a recovery that still feels subdued on the ground for businesses and households alike.

Most indicators point to an increasingly two-speed economy. Industrial production and high-tech manufacturing remain resilient, supported by policy incentives and external demand, while sectors tied to domestic consumption and real estate continue to lag. Fixed asset investment, now slightly negative year-to-date, underscores the cautious sentiment among both firms and local governments, even as manufacturing and infrastructure projects provide selective lift.

Looking ahead, the near-term challenge lies less in sustaining output and more in reviving confidence. The modest fiscal measures announced in October, including a RMB 500 billion (US$70.20 billion) bond issuance, will likely help stabilize investment but are unlikely to meaningfully shift consumption behavior without stronger income and employment support. Analysts increasingly expect policymakers to calibrate toward demand-side measures in late 2025, similarly to those unveiled at the beginning of the year, with a stronger emphasis on household spending, social safety nets, and incentives for private enterprise.

In essence, China’s Q3 data capture a moment of controlled deceleration, an economy avoiding sharp contraction but struggling to regain vigor. Achieving the five percent growth target now appears feasible; achieving a durable rebound in prices, confidence, and private investment will be the more difficult task. The months ahead will test China’s ability to turn stability into genuine momentum as it steers the economy toward its next phase of adjustment and reform.