China’s statistics chief framed the country’s unusually low headline inflation as a symptom of broader structural shifts rather than a cyclical failure, even as core prices — which strip out food and energy — show a modest rebound. At a State Council press briefing, National Bureau of Statistics director Kang Yi presented full-year 2025 data that underline a mixed macro picture: GDP growth met official expectations, but consumer prices remained subdued and producer prices stayed in negative territory.
The topline was reassuring for Beijing: 2025 GDP rose 5.0% year‑on‑year and the economy crossed the 140 trillion yuan mark, a milestone the government has repeatedly flagged. Yet headline CPI for the year was flat, while core CPI — excluding food and energy — rose 0.7%. Producer price indices continued to contract, with PPI down 2.6% on the year, pointing to persistent disinflationary pressure inside industry even as pockets of demand return.
Kang and other officials attributed the low headline CPI to two overlapping causes: complex international macroeconomic shifts that have dampened commodity and energy prices, and China’s own development stage, which includes industrial overcapacity and the slower growth of some traditional sectors. Officials stressed these forces are “phase-specific” and likely to be mitigated as demand-boosting measures take hold.
Policy action is already visible. Beijing has leaned on a package of fiscal and credit measures described as “more active and effective” macro policy, along with targeted consumption support such as a national trade‑in (以旧换新) program for durable goods. Officials credit these measures with lifting consumption of higher-end durables and services, and with helping push core CPI higher across the final months of 2025.
The rest of the data set highlights the uneven nature of the recovery. Industrial value added and high‑tech manufacturing expanded strongly — with high‑tech manufacturing and equipment production up double digits — and exports of high‑technology goods rose notably. But fixed‑asset investment fell 3.8% for the year and real estate investment plunged, reflecting the ongoing drag from property. Demographic headwinds also appeared: China’s population declined by about 3.39 million in 2025, intensifying long‑term questions over labour and demand.
For business and policy makers the central trade‑off is clear. Subdued headline inflation gives authorities room to support growth without stoking overheating, but prolonged producer deflation squeezes corporate margins and risks delaying much‑needed capacity rebalancing. The authorities’ strategy is to coax a “reasonable” rise in prices by expanding domestic demand, tightening problem sectors’ capacity, and sustaining fiscal support in a targeted fashion.
Internationally, China’s mix of steady growth, weak headline inflation and improving core measures matters because it affects global commodity flows, supply‑chain pricing and the outlook for Chinese imports. Continued expansion in high‑tech goods and services will sustain demand for certain intermediate goods even as bulk commodity demand remains sensitive to the pace of property investment and industrial restructuring.
The near‑term signal from Beijing is pragmatic: officials expect core inflation to keep rising gradually as consumption incentives and industry cleanups take effect, while warning that external shocks and a still‑weak domestic demand profile could reintroduce downside risks. For investors and trading partners, the key variables to watch are the evolution of core CPI, the trajectory of PPI, and whether fiscal and credit measures translate into durable gains in household spending rather than short‑lived, policy‑driven bumps.