Fitch forecasts China's growth to slow in 2025 amid trade turmoil

Fitch expects growth in China to slow to 4.7% in 2025 from 5% in 2024 as momentum from net trade moderates and private spending growth remains subdued.

In a global report published Tuesday, the rating agency said that when the trade war began this year, it assumed China would see a shift from external to internal demand as the main driver of economic growth, and that Chinese authorities would respond to the tariffs through a combination of fiscal and monetary stimulus.

However, for now, there are only tentative signs that this rotation is underway. Fiscal stimulus is supporting capital spending on infrastructure and consumer spending through durable goods exchange programs, Fitch says.

“Retail sales growth strengthened in the first months of the year, but July data points to weakened demand, and we do not expect the pace of fiscal stimulus to increase in the last months of the year,” he adds.

According to the report, Chinese GDP growth is expected to slow in the second half of 2025, after strong results in the first half.

There are risks to the domestic demand outlook, and Fitch believes the durability of the recovery in consumption is uncertain without a recovery in consumer confidence, which remains at very low levels—about two standard deviations below the mean. Low confidence reflects, among other factors, the negative wealth effects of the ongoing correction in the real estate sector.