Impact of U.S.-China Trade War on China's Economic Growth

China's economy grew at a rate of 4.8 percent in the third quarter of 2025, marking the slowest growth in a year, as reported by the National Bureau of Statistics. This slowdown is attributed to a combination of ongoing trade tensions with the United States, weak domestic demand, and a persistent property market crisis. The growth rate reflects a decline from 5.2 percent in the previous quarter and aligns with analyst expectations. Despite these challenges, China is on track to meet its annual GDP growth target of around 5 percent, supported by a rebound in exports, which rose by 8.3 percent year-on-year in September.

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While exports to the U.S. fell by 27 percent in September, overall exports remained robust, with Chinese companies successfully redirecting goods to alternative markets, particularly in Southeast Asia and Europe. This shift is part of China's broader strategy to mitigate the impact of U.S. tariffs, which have been a significant factor in the trade war initiated by President Donald Trump. The U.S. has threatened to impose a 100 percent tariff on all Chinese imports starting November 1, 2025, in response to China's export restrictions on rare earth elements, a critical component for various technologies.

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China's economic landscape is further complicated by a faltering real estate sector, which has seen new home prices drop significantly, eroding consumer confidence and household spending. Analysts predict that new home sales could decline by an additional 8 percent in 2025. The Chinese government has introduced various measures, including mortgage rate cuts and home purchase incentives, to stabilize the property market. However, the effectiveness of these measures remains uncertain, as the market continues to grapple with overcapacity and declining prices.

China's New Home Prices Drop At Fastest Pace In 11 Months

A spokesperson from China's National Bureau of Statistics highlighted the external complications posed by U.S. tariffs, stating that "the external environment for development has become even more complicated." Lynn Song, chief economist for Greater China at ING Bank, noted that while China is on track to meet its growth target, weak consumer confidence and a declining property market still need to be addressed. The International Monetary Fund (IMF) has projected that China's economy will decelerate further, forecasting growth rates of 4.2 percent in 2026.

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Critics argue that the Chinese government's focus on exports rather than domestic consumption has led to structural imbalances within the economy. Analysts from ANZ Research emphasize that both cyclical and structural factors contribute to weak private consumption, exacerbated by the ongoing real estate crisis and limited social safety nets. This reliance on exports makes China vulnerable to global economic fluctuations and trade tensions.

The Straits Times

As China's Communist Party prepares for its upcoming five-year plan, discussions are expected to focus on addressing income inequality and boosting domestic consumption. The plan aims to prioritize technological self-sufficiency and advanced manufacturing, particularly in sectors like artificial intelligence and green technology. Observers are closely monitoring the potential meeting between President Trump and Chinese President Xi Jinping, which could provide an opportunity to ease trade tensions and stabilize economic relations.

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• “What People Are Saying a Chinese National Statistics Bureau spokesperson told reporters: "Since the third quarter, certain countries have wantonly imposed tariffs, impacting the global economic and trade order.” — Chinese National Statistics Bureau spokesperson

Newsweek

• “The gap is widening between traditional and advanced sectors. China is no longer just scaling up production. It's automating, digitizing, and electrifying its industrial base. Robotics and EVs are now core growth engines, not side bets.” — Poe Zhao, technology analyst

Newsweek

• “China's stronger growth in the first half provides some buffer,” — Lynn Song, chief economist for Greater China at ING Bank

China GDP growth dips to 4.8%, slowest in a year amid tariffs

In summary, the ongoing U.S.-China trade war continues to exert significant pressure on China's economic growth, highlighting the need for strategic policy adjustments to navigate both domestic challenges and international trade dynamics.

China: Weak domestic demand, geopolitical tensions and an ongoing trade war expected to fuel economic slowdown