China’s economy grew by only 2.5% to 3% in 2025, according to estimates by the Rhodium Group think tank—roughly half the pace suggested by official data—as a sharp collapse in fixed-asset investment weighed on the $19 trillion economy during the second half of the year.
Despite this, policymakers are expected to announce that China met its full-year growth target of “around 5%” when senior leaders convene in March for the annual parliamentary session, where they are also set to unveil the next five-year plan. Officials are likely to highlight strong export performance amid an ongoing tariff war with the United States, even as domestic demand remains weak.
However, a report released by Rhodium Group on Monday estimates that nearly $500 billion in demand remains unaccounted for, raising questions about the accuracy of official growth figures.
If correct, the shortfall could undermine Beijing’s ability to assess how urgently it must act to prevent a sharp economic slowdown in the world’s second-largest economy, and weaken its ability to evaluate its negotiating position in talks with U.S. President Donald Trump aimed at ending the tariff conflict that has disrupted global supply chains.
Looking ahead, Rhodium Group projects that China’s economy will grow by only 1% to 2.5% in 2026, significantly below the International Monetary Fund’s forecast of 4.5% for that year.
“China’s 2025 economic growth story turns on whether investment merely declined in the second half of the year or collapsed,” the report stated, pointing to inconsistencies between data showing a drop in fixed-asset investment and figures suggesting that gross capital formation continued to make a positive contribution to GDP.
“History offers no examples of economies that have recorded 5% real GDP growth while facing years of persistent deflation, as China has for 10 consecutive quarters. We doubt China is the first,” the report added.
Fixed-asset investment—covering sectors such as roads, railways, housing, and factories—began 2025 on a strong note, rising 4.2% year-on-year in the first quarter. However, it slipped into negative territory by June and plunged by as much as 12.2% by October.
Officials reported that gross capital formation, the investment component of GDP, contributed 0.9 percentage points to real growth in the third quarter. The Rhodium report, however, questions whether declining indicators such as land sales and second-hand equipment purchases were fully reflected in those calculations.
According to the most recent official data, fixed-asset investment fell 2.6% during the January–November period, driven primarily by a 15.9% decline in property investment.
“The miscalculation for China’s economy has been persistent for too long,” the think tank said, “and always in the same direction of overstatement.”
