China’s economic momentum continued to weaken in the final quarter of 2025, prompting expectations that Beijing will need to roll out significantly more stimulus to support growth in 2026, according to analysts at ING.
In a note released Monday, ING pointed to fresh data showing that both industrial production and retail sales in China grew less than expected in November. Fixed asset investment also declined more sharply than forecast for a second straight month, signaling a broader slowdown in business spending.
ING said weak retail sales were largely driven by the fading impact of subsidy and trade-in programs introduced in late 2024. While those measures initially pulled forward consumer spending, the bank said policymakers will likely need to expand or extend such programs to maintain support for household demand.
Despite the broader slowdown, industrial production remained a relative bright spot. ING noted that strong overseas demand continues to help offset domestic weakness, providing some support to the manufacturing sector.
However, persistent stress in the property market and soft consumer spending are expected to remain major headwinds for China’s economy as it moves into 2026.
ING analysts warned that confidence remains the biggest structural challenge. They said subdued sentiment among consumers and businesses risks becoming entrenched, posing longer-term risks to economic growth beyond next year.
The latest data followed disappointing inflation figures released last week, which showed consumer inflation staying weak while producer prices fell for the 38th consecutive month in November. The ongoing deflationary pressure highlights the difficulty policymakers face in reviving domestic demand.
ING said policymakers have substantial work ahead if domestic consumption is to become a key driver of growth in 2026, as currently planned. While recent statements from China’s Politburo and the Central Economic Work Conference emphasized boosting domestic demand as a priority, they offered limited concrete measures beyond commitments to increased fiscal support.
The bank added that while China’s 5% growth target for 2025 remains broadly achievable, downside risks are rising for both the remainder of the year and beyond, driven by weakening domestic demand.
