Chinese economy has shown remarkable resilience this year, prompting major international organizations, including the World Bank and the International Monetary Fund, to raise their growth forecasts. This optimism highlights the effectiveness of China’s macroeconomic policies designed to stimulate consumption, particularly in the face of global challenges.
With a GDP growth rate of 5.2 percent in the first three quarters, China is on track to meet its annual target of approximately 5 percent. The country’s GDP is expected to reach 140 trillion yuan (around 19.87 trillion U.S. dollars) this year, further cementing its position as the world’s second-largest economy.
Despite these positive indicators, misunderstandings about China’s economy persist. Some critics accuse China of over-exporting and under-consuming, while others underestimate the country’s technological innovations.
This article explores various China-related topics, including trade, consumption, market dynamics, and technological innovation, to provide a comprehensive picture of the Chinese economy through hard data and expert analysis.
Recent customs data indicate that China’s total goods imports and exports grew by 3.6 percent year-on-year in the first 11 months of 2025. In a volatile global trade environment, some voices have questioned China’s reliance on an export-driven growth model, claiming it threatens industries in other countries. However, observers argue that such concerns overlook the broader economic picture and run counter to market principles.
Zhang Qunzi, Vice Dean of the School of Economics at Shandong University, states that in a market economy, high-quality and competitively priced goods are more likely to succeed, with innovation at the core of competitiveness.
From a consumer perspective, Chinese products, including daily necessities, household appliances, and electronic equipment, provide high quality and affordability. “Closing one’s market simply because others have stronger production capabilities is trade protectionism and a major drag on the world economy,” Zhang argues.
Additionally, research from the U.S. National Bureau of Economic Research suggests that Chinese productivity growth has positively impacted U.S. welfare by reducing consumer prices and living costs. An article in Asia Times critiques the “beggar-thy-neighbor” accusation against China’s economy, suggesting it reflects the West’s “sanctimony” and a rejection of classical economics. The article highlights that competition in China has actually lowered the price of capital goods, facilitating industrialization in Global South countries.
Furthermore, the narrative around China’s “mercantilist determination to sell but not to buy” is contradicted by the fact that China has been the world’s second-largest importer for 16 consecutive years. Goods and services imports are expected to exceed 15 trillion U.S. dollars during the 14th Five-Year Plan period (2021-2025).
The recommendations for formulating the 15th Five-Year Plan (2026-2030) adopted at the fourth plenary session of the 20th Central Committee of the Communist Party of China in October indicate China’s commitment to balanced development of imports and exports.
Contrary to claims of a “consumption downgrade” in China, consumer spending has continued to grow. The country has committed to expanding domestic demand by enhancing living standards and increasing consumer spending over the next five years.
Official data reveals that retail sales of consumer goods increased by 4 percent year-on-year during the first 11 months, with services consumption growing even faster. Notably, categories such as culture and sports, as well as telecommunications and information, recorded double-digit sales growth.
Fan Yubo, a researcher at the Shandong Academy of Social Sciences, argues that the notion of consumption downgrading does not align with China’s economic reality. Rather than a downgrade, consumption is upgrading in diverse ways, with traditional luxury spending cooling while demand for new energy vehicles, smart devices, and cultural experiences surges.
Consumer preferences are also evolving, with a focus on high-quality, intelligent, and green products. Gen Z consumers are prioritizing product quality, functionality, cultural significance, and cost-effectiveness over luxury brands.
“China’s shoppers are becoming more deliberate in how they balance value, convenience, and experience,” says Bruno Lannes, a senior partner at Bain & Company’s consumer products and retail practices.
The Central Economic Work Conference recently identified expanding domestic demand as a key priority for China’s economy in the coming year, outlining plans to boost consumption and increase urban and rural incomes. Fan asserts that this focus will support sustained economic growth.
This year, China has intensified efforts to combat “involution,” a term used to describe cutthroat competition where aggressive price cuts lead to diminishing returns. While some foreign media outlets suggest that involution is a flaw of the China model, evidence shows that China is capable of addressing this issue.
Regulatory measures, including capacity control in crowded sectors, pricing monitoring for new energy vehicles, and the phase-out of obsolete industrial capacity, have already yielded positive results. Major industrial firms are experiencing improved profitability, with the producer price index rising by 0.1 percent in November, marking the second consecutive monthly increase.
Involution in certain sectors is viewed as a growing pain, inevitable in a highly competitive market economy, but one that will ultimately be resolved, according to Zhang from Shandong University.
He emphasizes that while competition can lead to profit declines among similar enterprises, it is not a defining issue of China’s economic model.
Foreign media have often overlooked the Chinese government’s proactive approach to policy adjustments to address involution, according to Fan. A series of measures aimed at optimizing supply, expanding demand, and regulating market competition have begun to show positive outcomes. Policymakers are committed to addressing involution and have reaffirmed this commitment at the recent Central Economic Work Conference.
China’s technological innovations have garnered significant attention this year, with advancements in AI models, humanoid robots, and electric vehicles with longer-range batteries. Critics may dismiss China as a “fat tech dragon,” undermining the role of technological progress in driving economic growth, but the evidence paints a different picture.
The rapid growth of China’s high-tech and emerging sectors has revitalized economic development, according to Fu Linghui, spokesperson for the National Bureau of Statistics. From January to November, value-added output in the high-tech manufacturing sector increased by 9.2 percent year-on-year, with digital products manufacturing rising by 9.3 percent. Notably, production of industrial robots and integrated circuits surged by 29.2 percent and 10.6 percent, respectively.
Tax data further illustrates that innovation is bolstering revenue growth for Chinese enterprises. In the first three quarters of 2025, sales revenue for China’s “little giant” enterprises—outstanding specialized high-tech small and medium-sized firms—increased by 8.2 percent year-on-year, with high-tech manufacturing enterprises seeing an 11.8 percent rise, according to the State Taxation Administration.
International agencies have also recognized China’s status as an innovation powerhouse. A report from the World Intellectual Property Organization (WIPO) highlighted that China has risen to 10th place in the global innovation ranking in 2025, up one spot from the previous year. For the third consecutive year, China is home to the highest number of top 100 global sci-tech innovation clusters, with 24 clusters listed in the 2025 index.
Carsten Fink, chief economist of the WIPO, notes that China’s steady progression in the global innovation index reflects the underlying growth of its innovation economy, which is outpacing that of most other nations.
Overall, while challenges exist, China’s economy is demonstrating strong resilience and adaptability. Through balanced trade, evolving consumption patterns, and a commitment to innovation, China is poised to continue its growth trajectory and contribute positively to the global economy.
