How Is China Doing? The Economic Outlook
Growth target achieved, but demographic crisis and structural imbalances weigh heavily. Exports of woodworking machinery still growing.
Despite China having met the 5 percent growth target set for 2025, the economic picture emerging from year-end data reveals deep structural fragilities, far more concerning than the GDP figure alone.
The demographic emergency
The most significant data point concerns the population, which has declined for the fourth consecutive year. The number of new births has fallen below the threshold of 8 million (5.63 per thousand inhabitants), a negative record never reached since the founding of the People’s Republic in 1949. With a mortality rate at its highest since 1968 and a fertility rate now well below the replacement level, estimates suggest that China could halve its population by 2100. Already, the shrinking workforce is directly affecting consumption patterns, weakening domestic demand.
The imbalance between exports and consumption
China’s economy also shows another dangerous imbalance. While exports continue to drive the country, with a record trade surplus of 1.2 trillion in 2025 (levels not seen since the late 1990s), domestic consumption remains stagnant. Beijing has managed to diversify its markets toward Europe and Latin America to circumvent U.S. tariffs, but it has not resolved the problem of domestic demand, held back by deflation and the real estate crisis. In the long run, relying solely on exports may prove to be an unsustainable strategy.
Industry vs. real estate
China’s post-2021 strategy has favored the industrial sector at the expense of consumers and real estate. The 2025 results confirm this divergence, with industrial production and retail sales growing by 5.9 percent and 3.7 percent respectively, while real estate investment has declined by 17.2 percent. Moreover, for the first time since 1996, fixed-asset investment has also fallen (-3.8 percent), a sign that local administrations have slowed infrastructure construction as a driver of growth.
Ineffective monetary policies
In response to this scenario, the central bank has launched a stimulus package of around 150 billion dollars for private companies. However, the problem does not appear to be a lack of credit, but rather the absence of domestic demand. Without a reallocation of resources toward consumers, future growth risks a sharp slowdown.
Woodworking machinery
The performance of the local woodworking technology industry inevitably reflects the broader scenario. In the absence of reliable data on domestic consumption, some interesting indications can be drawn from export analysis. In 2024, China was the world’s largest exporter of woodworking machinery, with a value of 2.306 billion euros, up 9.3 percent compared to the previous year. Among destination areas, South America (+22.8 percent) and the Middle East (+19.4 percent) stand out for strong growth. The first nine months of 2025, the latest available data, show a further increase in total exports, up 4.9 percent compared to the same period of the previous year.
