China's Q3 GDP Growth Slows to One-Year Low Amid Property Slump and Trade Tensions

China's economy grew by 4.8% year-on-year in the third quarter of 2025, marking its slowest pace in a year. The official data, released by the National Bureau of Statistics (NBS) on Monday, October 20, 2025, indicates a deceleration from the 5.2% growth recorded in the second quarter. This slowdown is primarily attributed to a persistent property slump, subdued consumer spending, and intensifying trade tensions with the United States.

Economic Performance Overview

The 4.8% year-on-year growth for the July-September period aligns with market expectations but represents the weakest expansion since Q3 2024. On a quarterly basis, China's Gross Domestic Product (GDP) expanded by 1.1%, surpassing forecasts of 0.8% and following a revised 1.0% gain in the previous quarter. For the first three quarters of 2025, the economy grew by 5.2%, keeping China on track to meet its full-year growth target of around 5%.

Headwinds from Property and Consumption

The nation's crucial property sector continues to be a significant drag on economic activity. Investment in real estate saw a substantial decline of 13.9% year-on-year in the first three quarters, a sharper contraction than earlier in the year. This prolonged slump has negatively impacted household wealth and dampened consumer sentiment. Fixed-asset investment also decreased by 0.5% in the first nine months of 2025, marking its first contraction since 2020. Weak consumption further contributed to the economic deceleration. Retail sales growth slowed to just 3.0% in September, down from 3.4% in August, representing the slowest increase since November 2024. Analysts suggest this reflects the fading impact of earlier consumer goods trade-in schemes and generally subdued consumer confidence.

Escalating Trade Tensions

Renewed trade tensions with the United States have emerged as another critical challenge. The U.S. has threatened to impose an additional 100% tariff on Chinese imports starting November 1, following expanded controls on critical software exports in late September. In response, China expanded its own export controls, particularly on rare earth minerals. This geopolitical friction adds uncertainty to China's export-dependent economy.

Resilience in Industrial Output and Policy Outlook

Despite the broader slowdown, industrial output provided a relative bright spot, growing by 6.5% year-on-year in September. This acceleration from 5.2% in August marked a three-month high and exceeded forecasts, with high-tech manufacturing showing particularly strong gains. Exports also remained relatively strong as Chinese companies diversified into other global markets. The economic data comes as Chinese leaders convene for a key Communist Party meeting to finalize the next five-year plan (2026-2030). The slowdown is expected to intensify pressure on policymakers to implement further stimulus measures and rebalance the economy towards greater domestic consumption. Analysts, however, remain divided on the likelihood and timing of additional significant policy interventions this year.