Introduction to China’s Economic Data
China’s economic data for December is set to be released, and it’s expected to show a mixed picture. The data will include retail sales, industrial production, fixed asset investment, and gross domestic product (GDP) for the fourth quarter of 2025.
Key Economic Indicators
The key economic indicators to watch out for are:
- Retail sales for December
- Industrial production for December
- Fixed asset investment for December
- Gross domestic product for the fourth quarter of 2025
These indicators will provide insight into the state of China’s economy and its growth prospects for 2026.
Economic Growth Prospects
China’s economic growth is expected to slow down, with a forecasted GDP growth rate of 4.5% for the fourth quarter of 2025. This would be the weakest quarterly growth in three years. Despite this, the full-year growth for 2025 is expected to meet the government’s target of around 5%. However, the composition of growth is a concern, with consumption and investment dragging on growth, while exports remain resilient.
Challenges Facing the Economy
The Chinese economy faces several challenges, including:
- A historic contraction in investment
- Faltering household demand
- Weak income growth
- Soft labor conditions
- Ongoing pressure from falling home prices
These challenges are expected to offset the momentum from exports, which have been boosted by record shipments outside the United States.
Industrial Production and Exports
Industrial production is expected to accelerate in December, supported by strong external demand. This divergence reinforces expectations that China’s two-speed growth model will persist into 2026, with exports carrying the load as domestic demand remains subdued.
Deflation and Policy Response
Deflation continues to complicate the outlook, with nominal expansion expected to be significantly weaker than real GDP growth. This weighs on corporate earnings, household wealth, and fiscal revenues. Policymakers appear reluctant to respond with large-scale stimulus, with President Xi Jinping signaling greater tolerance for slower growth. The People’s Bank of China has leaned towards targeted easing, with a cautious approach to broader rate cuts.
Conclusion
In conclusion, China’s economic data for December is expected to show a mixed picture, with slowing growth, a historic contraction in investment, and faltering household demand. While exports remain resilient, the economy faces several challenges, including deflation and weak domestic demand. Policymakers are taking a cautious approach to stimulus, and the outlook for 2026 remains uncertain. As the Chinese economy navigates these challenges, it will be important to monitor the key economic indicators and policy responses to understand the implications for growth and stability.
