China’s Economic Growth Slows as Property Woes Deepen and US Trade Tensions Escalate
China’s economy lost momentum in the third quarter of 2025, highlighting growing challenges from its ongoing property crisis and renewed trade tensions with the United States.
Official data released on Monday revealed that the world’s second-largest economy expanded by 4.8% year-on-year in the three months ending September — its weakest growth rate in a year. The slowdown reflects the twin pressures of a struggling real estate sector and escalating friction between Beijing and Washington.
The figure marks a decline from the 5.2% annual growth recorded in the previous quarter, signaling that China’s post-pandemic recovery remains fragile despite government efforts to stabilize key industries.
Economic Outlook Weakens Amid Global Uncertainty
The third-quarter report arrives just days before China’s top policymakers convene to finalize the nation’s next five-year economic blueprint, a key meeting expected to shape Beijing’s fiscal and trade strategies through the end of the decade.
China’s National Bureau of Statistics (NBS) sought to project confidence, describing the economy as showing “strong resilience and vitality” despite persistent headwinds. The agency pointed to growth in technology, advanced manufacturing, and business services as bright spots helping to sustain momentum.
Beijing has set a full-year GDP growth target of “around 5%” for 2025 — an ambitious goal that now appears increasingly difficult to reach. Still, China has so far avoided a sharp downturn, aided by targeted fiscal support, infrastructure investment, and what — until recently — had been a period of relative calm in its trade relationship with the US.
Trade Tensions Flare Over Rare Earths
That fragile truce came under strain earlier this month when China imposed sweeping export controls on rare earth minerals — essential materials used in global electronics, renewable energy systems, and military technologies.
The move rattled global supply chains and immediately drew a strong response from Washington. US President Donald Trump threatened to impose an additional 100% tariff on Chinese imports, reigniting fears of a full-blown trade war between the two economic superpowers.
In an attempt to cool tensions, US Treasury Secretary Scott Bessent announced plans to meet Chinese officials this week in Malaysia, aiming to pave the way for a potential meeting between President Trump and Chinese President Xi Jinping.
Before the recent flare-up, Chinese exporters had taken advantage of the trade truce to boost shipments to the United States. In September, exports rose by 8.4%, contributing to a short-term lift in industrial activity. Imports also increased, reflecting steady demand for energy and raw materials to fuel China’s vast manufacturing sector.
Industrial Growth Offers Some Relief
China’s industrial output grew 6.5% year-on-year in September, with major gains in sectors such as electric vehicles (EVs), 3D printing, robotics, and renewable energy technologies. These industries have been central to Beijing’s push to modernize manufacturing and reduce reliance on Western technologies.
The country’s service sector — which includes IT support, professional consulting, logistics, and transportation — also expanded, helping offset weakness in other areas of the economy.
However, economists warn that external demand alone cannot sustain long-term growth. Domestic consumption remains subdued despite Beijing’s efforts to stimulate spending through subsidies, wage incentives, and consumer discounts.
The Property Crisis Deepens
While industrial production shows promise, China’s real estate sector continues to be its biggest drag. Investment in property development plunged 13.9% in the year to September, underlining the depth of the crisis that has gripped the housing market since 2021.
The property meltdown — triggered by high debt levels and developer defaults — has led to falling home prices, shrinking sales, and even abandoned construction projects across major cities. Once a cornerstone of China’s growth engine, the sector now represents one of its most significant risks.
“The housing market remains in a deep downturn,” said Laura Wu, an economics lecturer at Nanyang Technological University. “Home prices have declined in nearly every major city despite government stimulus efforts. In the long run, property remains the biggest drag on China’s economic growth.”
The real estate industry accounts for roughly one-third of China’s economy, including indirect contributions from construction materials, home furnishings, and local government revenues. Falling property values have not only eroded household wealth but also strained local governments that rely on land sales for funding.
Government Measures Struggle to Reignite Confidence
Beijing has rolled out multiple stimulus programs to support the housing and consumer markets. These include tax breaks, down payment reductions, and mortgage rate cuts to make home ownership more affordable. Additionally, local governments have been directed to accelerate stalled construction projects to restore confidence among buyers.
Despite these measures, analysts remain skeptical about a quick turnaround. Sheana Yue, senior economist at Oxford Economics, said that while exports have provided a temporary cushion, sluggish domestic spending continues to limit overall growth potential.
“Without additional policy support, it’s unlikely that China’s GDP will exceed 4.8% this year,” Yue said. “The upcoming Five-Year Plan could outline more aggressive measures to revive consumer demand and stabilize the property market.”
The Road Ahead: Balancing Growth and Stability
China’s leadership faces a complex balancing act — stimulating economic growth without triggering financial instability or worsening trade relations with the United States.
The government’s ongoing push toward technological self-sufficiency — including advances in semiconductors, artificial intelligence, and clean energy — could help offset external pressures. However, experts caution that meaningful results from these initiatives may take several years to materialize.
Meanwhile, trade relations remain unpredictable. Any escalation in tariffs or sanctions could disrupt global supply chains and further weaken investor sentiment.
For many economists, China’s best hope lies in reviving domestic consumption and restoring confidence in the private sector. But with household debt rising and youth unemployment still high, achieving that goal will be no easy task.
Global Ripple Effects
The slowdown in China’s economy has far-reaching implications. As a major driver of global demand for commodities, energy, and consumer goods, weaker Chinese growth could affect economies worldwide — from Asian manufacturing hubs to exporters in Europe and Latin America.
Markets have already reacted cautiously. Oil and metal prices have fluctuated amid concerns about reduced Chinese demand, while investors are closely watching any signs of further policy intervention from Beijing.
Still, analysts say the situation remains manageable — for now. As long as China can maintain growth near the 5% mark, global markets are unlikely to face major shocks.
Conclusion: A Pivotal Moment for China’s Economy
China’s 4.8% third-quarter growth marks a critical turning point for its economy. The persistent property crisis, coupled with renewed trade friction with the US, underscores the fragile balance Beijing must strike between growth, reform, and global competition.
While the country’s industrial and technology sectors show encouraging resilience, structural challenges in housing and domestic consumption continue to weigh heavily on its long-term outlook.
As policymakers gather this week to map out the next phase of China’s economic strategy, the world will be watching closely. The choices made in Beijing over the coming months could determine not just China’s trajectory — but the direction of the global economy itself.