China's economy improved at the start of 2025, but challenges remain

The Chinese economy showed signs of improvement in the first two months of the year, though housing market weakness remained a drag on growth, government data showed Monday.

Retail sales were up 4% in January and February compared to last year, and industrial production rose 5.9%, the National Bureau of Statistics reported. The stronger than expected data helped buoy stock markets in Asia.

A spokesperson for the bureau said the economy is moving in the right direction but cautioned that challenges remain at home and abroad. U.S. President Donald Trump has put a 20% tariff on Chinese products, which could set back an economy with a high dependence on exports.


"The external environment has become more complex and grim, domestic effective demand is insufficient, some companies are facing difficulties in production and operation, and the foundation for the continuous recovery of the economy is still unstable," Fu Linghui said at a news conference.

A long-running real estate crisis is weighing on the overall economy, depressing consumer confidence and spending. Real estate investment fell 9.8% in the first two months of the year, the statistics bureau said.

The good news is that real estate price declines have slowed, though they have yet to bottom out. Prices for both new and existing homes fell in January and February, but at a much slower pace than most of last year.

ING bank said it expects real estate prices to stop falling this year but they likely will not rebound quickly.

"February's data showed that it would be wise for officials not to take their foot off the pedal in terms of policy support," Lynn Song, the chief Greater China economist at ING, wrote in a report.