China’s Q3 GDP Growth Faces Year-Low on Property Slump, Trade Tensions
China’s economy is facing significant challenges, with growth expected to reach a year-low in the third quarter of 2025. A prolonged decline in the property sector and increased trade tensions are impacting demand, presenting a complex scenario for policymakers.
Economic Outlook for Q3 2025
Forecasts indicate that China’s GDP growth for July to September may be around 4.8% year-on-year. This marks a decrease from 5.2% in the previous quarter, according to a recent Reuters poll. If these predictions hold true, it will be the slowest growth rate since the third quarter of 2024.
Future Projections
For the fourth quarter, growth is projected to be even lower at 4.3%. This would bring the total expected GDP expansion for 2025 to just 4.8%, slightly below the official target of approximately 5%.
- Q3 GDP Growth: 4.8%
- Q2 GDP Growth: 5.2%
- Projected Q4 GDP Growth: 4.3%
Stimulus Measures and Economic Policy
In response to these challenges, Beijing has announced various modest support measures throughout the year. Analysts are divided on the likelihood of implementing new stimulus initiatives before year-end, particularly as trade tensions with the U.S. persist.
Senior strategists suggest that while a stimulus package of between 500 billion yuan ($70.22 billion) and 1 trillion yuan could be on the horizon, growth for the latter half of the year may still remain below 4.5%.
Trade Tensions and Domestic Consumption
Renewed trade tensions, particularly with the U.S., underscore the vulnerabilities in China’s economy, which heavily relies on manufacturing and foreign demand. There are growing expectations for Chinese leaders to implement reforms that focus on enhancing domestic consumption as a means of stabilizing growth.
Policymakers face a challenging balancing act: stimulating growth while mitigating the harmful effects of entrenched deflation and overcapacity. Reforms aimed at boosting private spending will likely involve difficult transitions from traditional economic models.
Actions from the Central Bank
The People’s Bank of China (PBOC) has maintained a steady policy rate for several months. Analysts anticipate the bank may enact modest easing measures in the near future, including potential cuts to the seven-day reverse repo rate and the benchmark loan prime rate.
| Indicator | Current Value | Likely Change |
|---|---|---|
| 7-day Reverse Repo Rate | Steady | Expected 10-basis point cut |
| Loan Prime Rate (LPR) | Steady | Similar reduction expected |
Beijing is also preparing to deploy 500 billion yuan in policy-based financial tools to accelerate investment projects and support its slowing economy. While export growth showed signs of recovery in September, the overall momentum appears to have weakened, indicating potential deflationary pressures are still a concern.
