China Meets 5% Growth as Exports Outpace Consumption (Full Transcript)

[00:00:00] Speaker 1: Now, from the world's largest economy to the world's second largest, China. It grew at one of its slowest rates in the last decade towards the end of last year. But despite a slowdown in the last three months of last year, Beijing hit its annual growth target of 5% while battling the on-off trade war with the United States. Let's talk to Rory Green, Chief China Economist at TS Lombard. Rory, good to have you here. And look, no surprise, they hit that target.

[00:00:24] Speaker 2: They did indeed. Xi Jinping never misses 5%, bang on, as they said in March last year.

[00:00:33] Speaker 1: Yes, and so we can potentially question the veracity of those numbers. But nonetheless, China managing to navigate some of that political turmoil.

[00:00:42] Speaker 2: Indeed, and navigating it pretty well. Our measure of GDP is about a percentage point lower than the official one. But as I'm sure we'll get on to, a lot of that growth is driven by exports. And that is verifiable. We can ask Germany how much they imported from China. It is a real number, and it's been resilient despite the big Trump tariffs.

[00:01:04] Speaker 1: Yes, and what's interesting, of course, is the changes we may see as a result of those Trump tariffs in the way that the world does business. And actually, whilst President Trump might try to cut China out of the trade picture, it's forging its own new relations with other countries.

[00:01:21] Speaker 2: It is. We've seen agreements with Canada. The EU is talking more favorably with China on vehicle imports. And it's a combination of other countries looking for alternative supplies from the U.S. and from China. And I think still underestimated is the massive gain in productivity and technology that is happening within the PRC. There's been some real rapid movement up the value chain. And China is no longer just making the cheap stuff. It's making cheap but very high-quality and high-tech goods that are proving incredibly competitive.

[00:01:59] Speaker 1: Yeah, Rory, one of the challenges, and it's not a new one, but for China right now is that slowing birth rate, of course, and also domestic consumption, that whilst it tries to pivot away from just servicing overseas customers and serving its own economy, that isn't going as well as maybe it would hope.

[00:02:18] Speaker 2: That's right. Yeah, so on the domestic consumption side, it was an OK year in 2025, but slowing notably in Q4, as you mentioned, Ben. And this is really going to be pivotal in 2026. It's the start of a 15th five-year plan. And Beijing is really starting to hammer the rhetoric and the political objectives around that consumption transition. So we should be looking for stronger policies this year to really try and structurally rebalance towards a higher consumption share of GDP. But it is very difficult. We haven't seen enough yet on the policy side to have high conviction there. I think we will start to see it in 2026, but plenty to be done to try and boost the domestic side and reduce reliance on exports.

[00:03:10] Speaker 1: Yeah, so many moving parts right now on that. Rory, always good to get your insight. Thank you, Rory Green there at TS Lombard. Thank you.