China’s real GDP growth moderated to 4.5% y/y in 4Q25 from 4.8% y/y in 3Q25, in line with Bloomberg’s poll, UOB Group's economist Ho Woei Chen reports.

Robust industrial production cushions weak consumption

"The full year growth of 5.0% in 2025 is in line with the official target and on par with 2024. Final consumption expenditure and net exports of goods & services contributed 2.6 ppt (2024: 2.2 ppt) and 1.6 ppt (2024: 1.5 ppt) respectively to the full year growth while contribution from gross capital formation fell to 0.8 ppt (2024: 1.3 ppt). In Dec, China’s macroeconomic data indicates that growth remained skewed toward exports and industrial production while retail sales and investment continued to be biased lower."

"With continued support for domestic consumption and government investment, we see China’s growth remaining positive albeit slowing moderately to 4.7% in 2026. The impact of US tariffs and the higher base for exports will become more evident but tailwinds from global technology demand may provide some upside. The National People's Congress (NPC) starting on 5 Mar will set the growth target for 2026 where the current expectation is for officials to repeat the 'around 5%' target."

"As the benchmark 7-day reverse repo rate was left unchanged in last week’s announcement, it is likely that banks’ loan prime rate (LPR) fixings will also be steady this month (fixing on 20 Jan). Our base case assumption remains for a 10-bps policy rate reduction and a 50-bps reserve requirement ratio (RRR) cut during the year, bringing the 7-day reverse repo, 1-year LPR, and 5-year LPR to 1.30%, 2.90%, and 3.40%, respectively."