China’s growth model loses steam as housing slump drags demand and deflation persists

China’s export-led growth is losing steam as a real estate crash and weak domestic demand fuel a deflationary spiral, even after a record 2025 trade surplus and about 5% GDP growth. December retail sales were only 0.9% higher, fixed-asset investment fell sharply, and tens of millions of homes remain unsold, underscoring the economy’s exposure to the property market. Analysts warn that relying on exports is unsustainable and call for a consumer-led rebalancing, with Fitch and IMF foreseeing slower growth in 2026.