China grapples with slowest economic growth in decades amid global pressures

China indicated that the world’s second-largest economy growth target has officially entered into an era of slower expansion, setting a growth target of 4.5%-5%. This is the lowest expansion goal since 1991 and marks the first time the target has been lowered since it was cut around 5% in 2023, as the nation struggles with challenges both at home and abroad.

The details were released during China’s political gathering known as “Two Sessions”, alongside release of some details of the 15th Five-Year Plan for the world’s second largest economy. Meanwhile, the full text of the plan which will outline China’s economic development objectives to 2030, will be voted on during the formal final meeting.

China is seeking to lead a global energy push, reduce carbon emissions and improve environmental protection. The country also aims to build a “childbirth-friendly society” as it addresses growing concerns over employment, education, and healthcare.

Official figures show China hit 5% economic growth target

Official figures released in January demonstrated that China hit a 5% economic growth target for 2025 as a whole. On the other hand, Beijing also reported that economic expansion had slowed to 4.5% in the last three months of the year. It has been observed that more than two-thirds of China’s provinces have scaled back their growth ambitions, either lowering targets or shifting language from a higher target to above a certain rate.

In this connection, Zhou Zheng, a political analyst at China Macro Group said: “Beijing’s new growth target is being realistic as it deals with complex domestic challenges and a difficult global trade environment.”

Conversely, ongoing challenges further call for in-depth analysis of the pivotal reasons behind the lowering of the economic growth target.

Georgetown University researcher Ning Leng noted that China’s growth figures should be taken with a “grain of salt” in line with recent data suggesting a weaker economic picture.

She further argued that the crisis in China’s property sector has severely impacted the country badly, citing it as a prime reason for its weak domestic consumption as reported by the BBC.

The real estate market plays a primary role that once accounted for nearly a third of the Chinese economy and was a vital source of income for local governments-many of which have huge debts. These challenges have disrupted industry mechanisms, leading to layoffs and pay cuts across the country.

How have manufacturing and exports helped drive economic growth?

The role of manufacturing and exports is crucial in supporting China’s economy. The country recorded the world's largest ever trade surplus, with the value of goods and services sold internationally exceeding imports to $1.19tn. According to experts, China has become heavily dependent on exports to bridge the gap- a point of economic weakness that the US has also been experiencing.

President Trump is expected to visit China in April and meet Xi Jinping for their first in-person meeting this year. At present, there is no longer a dependency on Venezuelan oil after the US captured President Nicolas Maduro in January. Beijing has highlighted that it is far less dependent on fossil fuels, as it has been transitioning to renewable energy for several years.