China Growth Slips in Q4 to 4.5% While Metals Production Peaks

TLDR

China’s Q4 2025 GDP growth slowed to 4.5%, down from 4.8% in Q3.
Coal output reached 4.83 billion tons in 2025, the highest ever recorded.
Aluminum production rose 2.4% to a record 45.02 million tons in 2025.
Retail sales grew only 0.9% YoY in December, missing market expectations.

China’s economic growth cooled in the fourth quarter of 2025, recording a year-on-year increase of 4.5%, according to official data from the National Bureau of Statistics. This was a slowdown from 4.8% in the third quarter and matched the pace seen in early 2023.

Despite the weaker Q4 reading, China met its full-year GDP growth target of 5.0%, supported by gains in high-tech manufacturing and services. However, the slower momentum highlighted continued weakness in consumption, property, and overall domestic demand.

Metal and Coal Output Reach New Peaks

Aluminum and coal production both set annual records in 2025. Aluminum output rose 2.4% to 45.02 million tons, while December alone saw 3.87 million tons, the most ever produced in a single month. According to the statistics bureau, this growth was driven by sectors like electric vehicles and renewables.

Coal production climbed to 4.83 billion tons, up 1.2% from the previous year. This increase occurred despite stricter mine safety inspections during the second half of the year. The government had previously pushed energy producers to expand supply following earlier shortages in 2021.

Steel output moved in the opposite direction, falling 4.4% year-on-year to 961 million tons. This was the first annual output under one billion tons since 2019. Lower construction activity and weak property sales weighed on demand, while regulators have also expressed concern about overcapacity.

Consumption and Investment Slowed Further

Retail sales continued to show limited growth, rising only 0.9% in December from the same month a year earlier. That figure came in below expectations and followed a 1.3% increase in November. For the full year, retail sales reached RMB 50.12 trillion, up 3.7%, with online retail climbing by 8.6%.

Fixed asset investment declined by 3.8% across 2025. Property investment saw a steep drop of 17.2%, driven by weak housing sales and tighter financing for developers. Manufacturing investment grew slightly, while high-tech areas like information services and aerospace recorded double-digit growth.

Manufacturing and Services Provided Economic Support

Industrial output rose 5.9% year-on-year in 2025. Equipment and high-tech manufacturing outpaced the overall industry, with growth rates above 9%. Output was especially strong in robotics, electric vehicles, and 3D printing. In December, the PMI returned to expansion at 50.1.

The services sector expanded 5.4% for the year. Information and software services rose by 11.1%, and leasing and business services increased by 10.3%. While consumer services posted slower gains, the broader sector contributed to overall GDP growth.

Prices Stay Flat and Lending Declines

Consumer prices remained unchanged in 2025, while the producer price index declined 2.6%. Core inflation increased only 0.7%. Economists expect deflation to continue into 2026, which could mark the longest stretch in recent decades.

New loans dropped to RMB 16.27 trillion, the lowest in seven years. Weak demand for credit added pressure on the People’s Bank of China, which lowered interest rates by 25 basis points.

Analysts at Goldman Sachs expect further cuts and a reduction in the reserve requirement ratio in the first half of 2026. As China begins its 15th Five-Year Plan, the focus is likely to remain on managing domestic risks, boosting innovation-driven growth, and stabilizing demand.

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