China Economic Quarterly Q3 2025
China’s 15th Five Year Plan Recommendations were unveiled against a complex economic backdrop: the economy remains on track to meet its 5% growth target for 2025, with high tech industries continuing to outperform, consumption softening, and corporate sentiment turning cautious. The Recommendations set out China’s strategic roadmap – prioritising the revitalisation of traditional industries through digital and green upgrades, fostering strategic emerging sectors, tackling "involution," elevating household demand, and reshaping capital and trade flows. Our latest China Economic Quarterly examines how near-term signals and long-term strategy intersect, and what this means for businesses and investors navigating China’s evolving landscape.
Key economic signals
- GDP growth slowed in Q3 but remains on track for the 5% full year target, as strength in manufacturing and services was tempered by construction drag.
- Industrial production continues to anchor growth, with high‑tech and equipment manufacturing outperforming the broader sector on the back of structural upgrading and policy support.
- Exports continued to underpin demand, but domestic consumption is weakening following the policy driven rebound in the first half of the year as stimulus effects fade; meanwhile, the external environment remains clouded by trade frictions and global uncertainty.
- Corporate sentiment has turned more cautious, reflected in soft private investment and PMI readings, though factory‑gate prices show tentative improvement.
- Monetary policy remains accommodative, with financing underpinned by government bond issuance; a revival in corporate borrowing will be critical to reinforcing growth momentum.
Special topic – China’s 15th Five Year Plan Recommendations
- A dual‑track industrial strategy: The Recommendations place top priority on revitalising traditional sectors through digital and green upgrades, while continuing to foster strategic emerging industries – underscoring renewed focus on strengthening the "real economy."
- From involution to high‑quality growth: Policymakers explicitly address involution by promoting more effective investment, curbing excessive competition, and fostering innovation. At the recent Central Economic Work Conference, President Xi reiterated that economic work must be tailored to local conditions, guiding regions to avoid wasteful competition.
- Elevating domestic consumption as a core driver: With external demand under pressure, the Recommendations positions household consumption as a central pillar of long term growth, focusing on "investing in people" and property market stabilisation.
- Strategic reshaping of capital and trade: A more balanced approach is outlined – attracting inbound FDI into high‑tech industries and newly opened service sectors, while managing outbound investment and positioning the economy to climb global value chains.
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