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    In Q4 2025, China’s real GDP growth fell to 4.5% year-on-year, according to UOB Group economist Ho Woei Chen.

    by VT Markets
    /
    Jan 19, 2026
    In December, China’s economic data revealed that growth is mainly coming from exports and industrial production. However, retail sales and investments are showing weaker trends.

    Growth Projection for 2026

    China’s growth is forecasted to slow to 4.7% in 2026. This is due to U.S. tariffs and a higher baseline for exports. Yet, global technology demand could provide some positive support. The 7-day reverse repo rate has stayed the same lately, and banks’ loan prime rates are expected to remain steady. A 10-basis-point cut in policy rates and a 50-basis-point reduction in the reserve requirement ratio are anticipated this year. This would adjust the 7-day reverse repo rate to 1.30%, the 1-year LPR to 2.90%, and the 5-year LPR to 3.40%. The National People’s Congress in March is set to establish the growth target for 2026, which is expected to be around 5%.

    Market Strategies and Monetary Policy

    The Chinese economy shows a noticeable divide. In the fourth quarter, growth slowed to 4.5% year-on-year, leading to an overall growth of 5.0% for 2025. Recent data supports this trend: December’s industrial production increased by 6.8%, while retail sales growth was disappointing at just 2.9%. This suggests that strategies favoring industrial and export sectors over domestic consumer sectors may perform better in the short term. Weak domestic demand is largely due to the ongoing property crisis, which continues to hurt investment. In 2025, property investment dropped by 9.6%, marking three consecutive years of decline and negatively impacting sentiment. This ongoing weakness in investment makes long positions on Chinese equity indices like the CSI 300 or Hang Seng China Enterprises Index seem risky. Create your live VT Markets account and start trading now.

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