China has basically hit its 5% GDP target for 2025, according to President Xi Jinping. Speaking at the annual meeting of the Chinese People’s Political Consultative Conference, Jinping called the year “extraordinary” for China as it defied global pressures.
“The growth rate is expected to reach around 5%, continuing to rank high among the world’s major economies,” he said. He pointed to a shift in focus: away from just growing fast, and toward improving quality and innovation. Xi also warned against “reckless” projects and backed slowing down in certain regions to avoid unnecessary risks.
China’s factory and service activity shows signs of recovery
Data is backing up his claim. The official manufacturing PMI for December hit 50.1, jumping past the breakeven mark and beating the 49.2 forecast.
That’s also a rise from November’s 49.2. The composite PMI, which includes both manufacturing and services, rose to 50.7 from 49.7, a clear step into expansion territory.
Services and construction aren’t sitting still either. The non-manufacturing PMI climbed to 50.2, up from 49.5 the month before. All of this points to a broader comeback after a rough patch earlier in the year.
Huo Lihui from China’s National Bureau of Statistics said December saw a clear boost in new orders, marking a “significant expansion” in both supply and demand.
The private sector backed that up too. A separate PMI by independent firm RatingDog reached 50.1 in December, up from 49.9. This also beat the expected figure of 49.8.
Yao Yu, founder of RatingDog, said manufacturing is growing again. He said new orders have been rising for seven months straight, helped by product launches and more business activity. But Yao also said that while companies are still hopeful for 2026, their confidence has dropped below normal levels.
Large firms grow faster while small ones stay behind
The National Bureau of Statistics showed that large enterprises are leading the recovery, as their PMI jumped to 50.8, 1.5 points higher than the month before.
Medium-sized firms edged up to 49.8, but that’s still below the growth line. Small businesses are still shrinking. Their index dropped to 48.6, a 0.5 point fall from November.
Markets didn’t react with much cheer. The Hang Seng index in Hong Kong dropped 0.83%, while the CSI 300 on the mainland rose 0.33%. It’s a mixed read, as investors watch closely for more signs of long-term momentum.
The numbers come just days after the central bank decided to leave loan prime rates unchanged, even as the economy struggles with weak demand and a housing sector mess. November’s retail sales and industrial output came in below forecasts. Even fixed asset investment fell, another sign the recovery still has holes.
Meanwhile, Beijing is also trying to balance currency pressures. The yuan is allowed to inch up slowly, which keeps trading partners calm and blocks fast inflows of speculative cash. A stronger currency can help bring in cheaper imports and move China closer to its goal of making the yuan a global player.
If you're reading this, you’re already ahead. Stay there with our newsletter.
