China Economy News Today (December 3, 2025): Services Slow, Property Stress Deepens as Beijing Targets 5% Growth in 2026

China’s economy entered December with a familiar mix of soft data, stressed property developers and fresh policy signals from Beijing. New surveys show the services sector losing momentum, Chinese and Hong Kong equities slipping, and the country’s housing crisis still unresolved — even as policymakers prepare to keep an ambitious growth target of around 5% for 2026 and step up support for small firms and services trade. ^[1]

Key takeaways from China’s economy on December 3, 2025

Beijing is expected to set a 2026 GDP target of about 5% as it tries to pull the economy out of a prolonged bout of deflation and launch the new Five‑Year Plan on a strong footing. ^[2]
Services activity slowed to a five‑month low in November, with a private PMI falling to 52.1 and employment in the sector contracting for a fourth straight month. ^[3]
Mainland Chinese and Hong Kong stocks fell today as weak services data and fresh worries over giant developer Vanke’s debt plan weighed on sentiment. ^[4]
China’s property crisis remains front and center: new home prices are inching up, but resale prices continue to slide, and Morgan Stanley estimates Beijing may need about 400 billion yuan ($57 billion) a year in mortgage subsidies to stabilise housing. ^[5]
Banks are cutting high‑yield deposits and facing tighter scrutiny of bond investments, while inclusive finance for small firms and services trade show strong growth, offering some offsetting positives. ^[6]
Regulators reaffirm a hard line on crypto and stablecoins, underscoring their focus on financial stability. ^[7]

Beijing poised to target 5% growth again in 2026

According to government advisers cited in local and international media, China is likely to maintain an economic growth target of around 5% in 2026, matching the 2025 goal. The target is expected to be endorsed later this month at the annual Central Economic Work Conference and formally announced at the National People’s Congress in March. ^[8]

Policymakers see a 5% goal as necessary to:

Launch the 15th Five‑Year Plan (2026–2030) strongly
Counter persistent deflationary pressures, which analysts expect could last until 2027
Keep average annual growth close to the roughly 4.17% needed to double per‑capita GDP to about $20,000 by 2035 and reach “moderately developed” status ^[9]

To support this, advisers are recommending:

A budget deficit of around 4% of GDP or slightly higher, similar to the record deficit ratio used in 2025
Continued front‑loaded government bond issuance in 2026
Extension of consumer “trade‑in” subsidies — estimated at 300 billion yuan this year — with more focus on services spending over goods ^[10]

External institutions broadly align with this outlook but see growth slowing over time. BBVA Research has just raised its 2025 GDP forecast to 5%, in line with Beijing’s aim, but projects 4.5% growth in 2026, citing domestic headwinds from the housing downturn, overcapacity and weak confidence. ^[11] The OECD, in a new global outlook released today, keeps its 2026 forecast for China at 4.4%, underscoring expectations of a gradual, not explosive, expansion. ^[12]

At the heart of Beijing’s strategy is a long‑discussed but elusive shift toward consumption‑led growth. Household consumption still accounts for only about 40% of GDP, far below the roughly 70% share in the United States. Policymakers are now openly talking about lifting that share to around 45% over the next five years, which would require more aggressive welfare, income and hukou (household registration) reforms to put money in households’ pockets rather than in state‑driven investment. ^[13]

Services sector slows to a five‑month low

Fresh data today from the RatingDog China General Services PMI, compiled by S&P Global, show that China’s services activity expanded in November at its weakest pace since June. The index slipped to 52.1, down from 52.6 in October, still above the 50 line that separates expansion from contraction but signaling cooling momentum. ^[14]

Key details from the survey highlight why the services sector is becoming a concern:

New orders grew at the slowest rate in five months, despite a pickup in export business
Employment fell for the fourth consecutive month, leading to a rise in unfinished work
Input costs continued to rise, driven by raw materials, office supplies and fuel, prompting some firms to raise output prices marginally
Business confidence stayed positive but eased to its weakest level since April ^[15]

The private survey broadly mirrors the official services PMI, which slipped into contraction territory in November at 49.5, down from 50.2 in October. ^[16] Together, the readings reinforce a picture of fragile domestic demand, even as external demand for Chinese services shows signs of recovery.

Stocks slide as services slowdown meets property stress

Equity markets reacted quickly to the soft services data and the latest turbulence in the property sector.

The Shanghai Composite and the CSI300 blue‑chip index each fell about 0.5% today.
Hong Kong’s Hang Seng Index dropped around 1.3%, with property developers and mainland‑linked shares underperforming. ^[17]

Investors are increasingly nervous that:

The services slowdown is not a blip but part of a broader cooling in activity — third‑quarter GDP already slowed to its weakest pace in a year. ^[18]
The property slump is nowhere near over, with fresh stress at major developer China Vanke adding to worries about systemic risk. ^[19]

Nomura’s chief China economist, for example, expects export growth to moderate in 2026 and warns that the property sector, which peaked in mid‑2021, may extend its slide for another year with little hope of a turning point before 2027. ^[20]

Property crisis: Vanke’s bond drama and the search for a floor

Vanke bondholders push back

One of the highest‑profile developments today involves state‑backed developer China Vanke, long seen as one of the sector’s more resilient names.

At least three investors in a Vanke onshore bond maturing this month have signalled they will oppose the company’s plan to delay repayment by one year, according to people familiar with the matter. ^[21]

Key points from the reports:

Vanke is asking to push back payment of a 2 billion yuan note due December 15, with the 3% interest also postponed by a year.
The company says it has little room to sweeten the proposal because it needs cash to finish and deliver homes.
Most of the notes are reportedly held by Chinese banks.
Vanke has 13.4 billion yuan of bonds coming due or under pressure through mid‑2026, plus more than 30 billion yuan in shareholder loans from state‑owned Shenzhen Metro Group. ^[22]

Vanke’s yuan bonds have slumped to roughly 25% of face value, and its dollar notes trade around 21 cents on the dollar, while its Hong Kong‑listed shares have dropped more than 45% from their February high. Rating agencies have flagged the risk of a distressed restructuring in coming months. ^[23]

Prices show a split market

Newly released data from China Index Academy earlier this week highlight a two‑speed housing market:

New home prices in 100 cities rose 0.37% month‑on‑month in November, accelerating from a 0.28% rise in October.
Resale (secondary‑market) prices fell 0.94%, deeper than the 0.84% drop the previous month, as high listings and weak expectations weighed on demand. ^[24]

On the surface, rising new‑build prices suggest that targeted support is helping developers shift inventory. But the persistent slide in resale values indicates homeowners are still under pressure and buyers remain cautious, contributing to the negative wealth effect that drags on consumption.

The mortgage‑subsidy debate

In a report updated overnight, Morgan Stanley estimates that to break the housing slump and rebuild confidence, China may need to spend about 400 billion yuan (US$57 billion) per year in mortgage subsidies, likely starting in 2026. ^[25]

The idea is to:

Use subsidies to bring mortgage rates closer to rental yields, making home ownership more attractive
Give heavily indebted households some relief and free up income for spending
Provide a more targeted form of stimulus than broad rate cuts or another massive infrastructure binge

The scale involved — roughly equivalent to a mid‑size stimulus package every year — underscores how central the property sector remains to the China economy story today.

Banks cut high‑yield deposits and face bond‑market scrutiny

China’s banking system is being quietly re‑engineered to support this policy push.

High‑yield deposits vanish

Today, multiple outlets reported that major state lenders including Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China (AgBank) have removed five‑year, large‑denomination certificates of deposit from their offerings. These products typically carried rates around 2–2.1%, and have been replaced by shorter‑term deposits (six months to three years) offering roughly 1.2–1.8%. ^[26]

The move is aimed at:

Cutting funding costs for banks, whose net interest margin has fallen to a record low of 1.42%
Creating room for lower lending rates to support the real economy
Nudging savers away from long‑term, high‑yield deposits that lock in relatively expensive liabilities for banks

Smaller regional and rural banks have already been taking similar steps, and large state banks cut deposit rates earlier this year. Yet despite these moves, household savings have continued to balloon, suggesting that without a stronger social safety net and better income prospects, Chinese households will keep stashing cash rather than spending it. ^[27]

PBOC probes bond‑investment risk

In parallel, some local branches of the People’s Bank of China have recently surveyed banks about their bond‑investment strategies, including whether they have been selling older bonds to book profits and how much interest‑rate risk they are carrying. ^[28]

The survey focuses on three areas:

How bonds are classified in banks’ books
How bond holdings contribute to profits
Where market‑rate risk is building as yields rise ^[29]

Benchmark 10‑year government bond yields have climbed nearly 20 basis points in the second half of the year, leaving some recently purchased bonds sitting on paper losses. The PBOC’s questions suggest a desire to pre‑empt financial‑stability risks before they become systemic, particularly as banks are being asked to support the real economy, property clean‑up and small‑business lending all at once.

Small‑business credit and services trade are bright spots

Amid the gloom, two areas stand out as relative positives in today’s China economy news: inclusive finance and services trade.

Inclusive finance for small and micro firms

New Xinhua data published via China Daily show that between 2021 and 2025, inclusive loans to small and micro enterprises grew at an average annual rate above 20%. As of the end of October 2025:

Outstanding inclusive loans to small and micro firms reached 35.77 trillion yuan (about US$5.06 trillion)
The interest rate on newly issued inclusive loans stood at 3.48%, roughly 2 percentage points lower than at the end of the previous Five‑Year Plan (2016–2020) ^[30]

These loans typically serve small firms, individual businesses and farmers, who often struggle to access credit due to limited collateral. Beijing has signalled that inclusive finance will remain a priority in the 15th Five‑Year Plan, reflecting its push to support employment and grassroots entrepreneurship even as large developers and state firms deleverage. ^[31]

Services trade growth accelerates

Fresh figures from the Ministry of Commerce show that China’s trade in services rose 7.5% year‑on‑year in the first 10 months of 2025, reaching nearly 6.58 trillion yuan (about US$930.5 billion). ^[32]

Breaking that down:

Service exports jumped 14.3% to more than 2.9 trillion yuan
Service imports increased 2.6% to around 3.67 trillion yuan
The service trade deficit narrowed by about 269 billion yuan compared with the same period in 2024
Knowledge‑intensive services trade grew 6.4% to roughly 2.51 trillion yuan
Travel services trade reached almost 1.81 trillion yuan, up 8.5%, with outbound travel services exports soaring 52.5% ^[33]

The resilience of services trade contrasts with weaker goods trade and helps Beijing’s narrative that the economy is gradually pivoting toward services and higher‑value activities, even as domestic demand remains uneven.

Regulators double down on crypto and stablecoins

Financial risk control remains a top priority. In a notable move today, the PBOC led a coordination meeting on virtual‑currency trading and speculation, bringing together law‑enforcement agencies, the judiciary and the cyberspace regulator. ^[34]

According to Caixin’s summary of the meeting:

Authorities reaffirmed that cryptocurrencies have no legal status in China and vowed to maintain a sweeping ban on trading and speculation.
Regulators highlighted growing risks from stablecoins, citing high‑profile fraud cases that used US‑dollar‑linked tokens to channel funds, including one that allegedly caused about 13 billion yuan (US$1.8 billion) in investor losses. ^[35]

The renewed crackdown is less about retail crypto enthusiasm — which has been heavily suppressed for years — and more about closing loopholes that could allow illicit capital flows, scams or hidden leverage in the financial system. It dovetails with Beijing’s broader effort to keep control over digital finance while it promotes its own central bank digital currency.

Hong Kong: lower HIBOR seen supporting growth in 2026

Across the border, Hong Kong’s economy is drawing cautious optimism from a drop in local interest rates:

After spiking to about 3.92% in September, the one‑month Hong Kong Interbank Offered Rate (HIBOR) has eased to around 2.88% and is expected to stay in the 2–3% range for the next two quarters. ^[36]
Economists quoted in local media forecast Hong Kong GDP growth of 3.4% in 2025 and 2.6% in 2026, helped by lower borrowing costs, strong IPO activity and robust capital inflows. ^[37]

Lower HIBOR could:

Reduce mortgage costs, supporting a residential property market that many believe is bottoming out
Encourage households to shift from time deposits into equities and real estate
Cut corporate financing costs, supporting new investments

Given Hong Kong’s role as a financial gateway for mainland China, this easing cycle is an important piece of the broader China‑economy puzzle, particularly for cross‑border capital markets and property investors.

What today’s developments mean for the China economy outlook

Putting all of today’s data and headlines together, several themes stand out:

Policy will stay supportive — and possibly more targeted.
Beijing’s likely decision to hold the growth target at 5% for 2026, plans for a sizeable budget deficit, and talks of mortgage subsidies all point toward continued, though more focused, stimulus rather than a retreat into austerity. ^[38]
Demand, not supply, is the main constraint.
Services PMIs, weak employment in services and soft resale home prices all suggest insufficient household demand and fragile confidence, despite strong exports and resilient services trade. ^[39]
Property remains the biggest swing factor.
Whether China can stabilise the housing market — including troubled giants like Vanke — without triggering a financial accident or reverting to massive, debt‑fuelled building will largely determine its medium‑term growth path. ^[40]
The financial system is being quietly reshaped.
Lower deposit rates, scrutiny of bond portfolios, expansions of inclusive finance and tighter crypto enforcement show regulators trying to channel credit toward productive uses while containing new risks, rather than simply flooding the system with cheap money. ^[41]
Global watchers expect slower but still solid growth.
BBVA Research, the OECD and major investment banks all foresee China growing more slowly than in the past but still contributing significantly to global GDP, with forecasts for 2026 clustering in the 4.4–5% range. ^[42]

For investors, businesses and policymakers, today’s China economy news underlines a simple reality: the era of high‑octane, property‑driven growth is over, and the transition to a more balanced, consumption‑ and services‑led model will be messy, gradual and policy‑heavy.