In 2025, as the final year of the 14th Five-Year Plan and a pivotal transition to the 15th Five-Year Plan, China's economy has navigated complex international headwinds and domestic structural adjustments with remarkable resilience and growth potential. The GDP grew by 5.2% year-on-year in the first three quarters, with multiple institutions and experts projecting the annual growth target of around 5% to be achievable. Looking ahead to the 15th Five-Year Plan period, China's economy is expected to maintain medium-to-high growth rates.
**Macro Perspective: Expected Targets Likely Achieved** Balancing stability and progress, China's macroeconomy in 2025 exhibits "target fulfillment with structural optimization," despite downward pressures. The China Macroeconomic Forum (CMF) recently forecasted a potential slowdown in Q4 GDP growth due to high base effects and supply-demand dynamics, but full-year growth is likely to remain around 5%, meeting expectations.
Growth drivers show dual support from industry and services. Data from the National Bureau of Statistics indicate a 6.1% year-on-year rise in industrial output (up 0.3 percentage points YoY) and a 5.4% increase in services (up 0.7 percentage points YoY) in the first three quarters, underscoring supply-chain resilience.
Exports outperformed expectations, with dollar-denominated exports up 6.1% and RMB-denominated exports up 7.1% in the first three quarters. While exports to the U.S. fell 16.9%, growth to ASEAN (14.7%), the EU (8.2%), and other regions (9%) diversified risks. Domestic demand remained stable, with retail sales and fixed-asset investment growing 3.5% and 3.4%, respectively, from January to October.
Challenges persist, including a "high-then-low" growth trajectory and subdued nominal GDP growth. Q1-Q3 GDP growth tapered from 5.4% to 4.8%, while low CPI (-0.1%) and PPI (-2.7%) readings dampened consumption and investment.
**Micro Perspective: Untapped Vitality** Micro-level data reveals "surface recovery with deeper activation needed." The urban surveyed unemployment rate averaged 5.2%, within the stable range, but youth unemployment (16-24 age group, excluding students) hit 16.6%, peaking at 18.9% in August. Household property income growth stagnated at 1.7% for two consecutive years.
Corporate profits rose 1.9% YoY for large industries, with progress in reducing arrears and inventory, yet constraints remain. Experts like Liu Shijin, former deputy director of the National Committee of the Chinese People's Political Consultative Conference, emphasize addressing the "perception gap" between macro data and micro experiences by boosting consumption and income distribution. Cai Fang of the Chinese Academy of Social Sciences highlights labor market reforms, such as enhancing redistribution and public service equity.
**Outlook: Sustained Medium-High Growth in the 15th Five-Year Plan** As China transitions between five-year plans, long-term growth fundamentals remain intact. The CMF report outlines four key trends for the 15th Five-Year Plan: 1. Medium-high growth (around 5% annually) supported by potential growth rates. 2. Industrial upgrading, with high-tech manufacturing and digital economy sectors driving "new quality productive forces." 3. Investment rates stabilizing near 40%. 4. Fiscal deficit expansion necessitating structural optimization for efficiency.
Yang Ruilong of Renmin University advocates for modernizing industries and integrating innovation with digital-real economy convergence. Liu Shijin proposes elevating consumption's GDP share by 1 percentage point annually as a core target. Mao Zhenhua notes the need to cultivate globally competitive tech giants to counter homogenized competition.
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