China’s Lagging Growth

Beijing has set the lowest growth target in decades, at 4.5 to 5 percent. When it reported a growth rate of 5.0 percent—exactly on target—last year, it raised more questions than confidence.

The actual growth last year was at about half of the official data, according to the Rhodium Group.

If Beijing has been overstating its number, why scale back now and break the streak of 5 percent growth?

That’s for “manipulation of people’s expectations and mentality” while still preserving the regime’s face, Yeh Yao-yuan, a professor of international studies at the University of St. Thomas in Houston, told The Epoch Times.

People of China, impacted by the worsening economy year after year, wouldn’t accept an inflated economic outlook again, which will simply be perceived as a “cruel irony,” he added.

Beijing recently reported strong export data for the first two months of the year, but some analysts remain unconvinced.

It’s an “artificial” number propped up by inventory building for transshipment rather than final sales, William Lee, chief economist at consultancy Global Economic Advisers, told The Epoch Times.

The booked exports are also cross-border inventory moves by Chinese entities under the same parent companies, said Cai Shenkun, an independent Chinese writer and commentator.

Local governments inflate the exports to get more cash from export tax rebates to pay for extra expenses during the holiday times, he told The Epoch Times.

Overall, analysts interviewed by The Epoch Times raised doubts about the reliability of Beijing’s export story: the regime kept saying that the increase in exports to Southeast Asian and European countries compensated for the double-digit drop of exports to the United States. 

Yet, contrary to increasing exports, Chinese factories have not been producing more. China’s factory activity index, or purchasing managers’ index, has largely shown contraction since April 2025.

Exports accounted for about half of China’s economic growth last year, and is expected to pull the same weight this year. Meanwhile, the United States is sustaining its tariffs and other countries are more wary of China’s dumping of its overcapacity.

Lee said that Beijing realized that “anything even close to 5 [percent] would be absurd.”

“Their model of growth is starting to show strain. Their dependence on export-led growth, without the U.S. market, is a huge vulnerability.”

Read more here.

—Terri Wu

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