New Delhi, May 6 China’s economy is losing momentum as weak domestic demand and a rapidly ageing population weigh on growth, signalling deeper structural challenges despite the country maintaining around 5 per cent expansion in 2025 and early 2026, a report has said.
A report by Modern Diplomacy highlighted that the headline growth figure suggests a clear slowdown from the double-digit expansion China once recorded and the 6–8 per cent range seen in the previous decade.
It further flagged that the biggest concern is persistently weak household spending. “People are not buying enough to drive strong growth,” the report said.
At the same time, external demand is also under strain. Exports, which have historically supported China’s economic rise, are slowing due to global uncertainty, geopolitical tensions and rising trade barriers.
Moreover, between 2012 and 2017, China’s growth was supported by strong consumption, robust investment and stable trade. However, from 2017 onwards, GDP growth weakened as domestic demand softened and export contributions declined.
Adding to the challenge is China’s changing demographic profile. According to the report, the country’s population is ageing and shrinking, leading to a steady decline in the working-age population.
With labour supply tightening, productivity gains have become the primary source of growth. However, productivity improvements have also slowed in recent years, raising concerns about the sustainability of future expansion.
In addition, investment has shown signs of fatigue. Fixed investment turned negative in 2025, reflecting weaker business sentiment and structural adjustments within the economy.
Exports are also facing growing pressure from shifting global supply chains, with some manufacturing activity moving to alternative destinations in Southeast Asia.
Meanwhile, higher tariffs and trade restrictions, particularly from the US, have further impacted China’s export competitiveness.
Looking ahead, the report said China’s growth outlook will depend heavily on its ability to boost productivity and offset the impact of a shrinking workforce.
However, slow progress in strengthening consumer demand remains a key risk.
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