As in past years, the largest divergence between official numbers and the think tank’s was in investment estimates.
China’s real GDP is estimated to grow between 2.5 per cent and 3 per cent this year—about half of the 5.2 per cent growth figure the National Bureau of Statistics reported in Q3 2025, US-based Rhodium Group said.
For domestic demand to lift China above 2-per cent GDP growth in 2026, Beijing must reverse the systemic causes of household and business malaise or pile on costly demand subsidies, it said.
For domestic demand to lift China above 2-per cent GDP growth in 2026, Beijing must reverse the systemic causes of household and business malaise or pile on costly demand subsidies.
However, positive momentum in Chinese economy was a first half story: In the second half of 2025, credit growth hit all-time lows, household consumption weakened as subsidies tailed off, and even export growth contributed less. Fiscal support growth weakened as well, producing a neutral—or maybe even negative—fiscal impulse for the third and fourth quarters.
Investment, the largest component of GDP, is declining substantially, with the official fixed asset investment (FAI) data falling so fast that it calls into question their reliability, a research note by the Rhodium Group said.
Throughout 2025, Beijing projected confidence in achieving 5-per cent growth despite domestic challenges and an unaccommodating external environment.
China’s 2025 economic growth story turns on whether investment merely declined in the second half of the year or collapsed. FAI data points to an outright collapse, declining by 11 per cent year on year (YoY) in nominal terms between July and November 2025.
Gross capital formation (GCF) data—the official investment component of GDP—reportedly still contributed 0.9 percentage points (pp) to real GDP growth during Q3, despite the FAI decline of 8 per cent YoY for the quarter. This makes no sense, and the NBS has provided no compelling explanation, the Rhodium Group noted.
A drop in property investment has spread to manufacturing and infrastructure. Manufacturing investment has come under pressure in the second half, falling from 9.2-per cent growth in 2024 to 1.9 per cent till November 2025, likely tracking trade war uncertainties.
Industrial capacity utilisation rates are declining.
Overall credit growth to finance investment reached all-time lows on multiple measures this year, rising by only 6.3 per cent YoY till November. Private sector credit has been particularly weak.
Growth in overall household borrowing, which includes loans to small service sector businesses, has reached an all-time low at only 1.1 per cent in November.
Positive first half conditions delivered a slight pickup in consumption growth on a full year basis.
Weak demand is also reflected in stagnant prices. The aggregate consumer price index has not increased on net in three years.
Fibre2Fashion News Desk (DS)