China’s economy looks set to hit its 5% GDP growth target again in 2025, but new analysis from Permutable reveals the outlook is far more fragile than the official numbers suggest.
"On paper, China’s growth trajectory looks resilient. But our sentiment indices reveal persistent fragility beneath the surface - households lack confidence, property remains in decline, and manufacturing strength is increasingly dependent on state support. Stability is being delivered, but the quality of growth is in question," says Wilson Chan, CEO of Permutable.
"Sentiment data shows that there is skepticism about the sustainability of China’s growth story. Until property stabilizes and domestic demand strengthens, the underlying picture will remain one of strain," adds Jack Watson, analyst at Permutable.
According to Permutable’s China Macro Sentiment Indices, which measure confidence across households, firms, and investors, key sectors remain under strain.
Key takeaways:
- Real estate investment has fallen -11% y-o-y, with new starts and completions both sharply down. Residential sentiment has stayed negative since early 2024.
- Output rose 5.7% y-o-y in August, yet investor sentiment continues to weaken, reflecting overcapacity, tariff risks, and reliance on subsidies.
- Retail sales are being propped up by subsidies and trade-in schemes, but households remain cautious, limiting prospects for a consumption-led recovery.
- U.S. imports of Chinese goods slumped -33% in August, with rerouting options narrowing.
