China’s economy rocketed by 5% last year with surprisingly strong exports despite a tariff war with President Donald Trump. Strong exports helped to compensate for weak consumer spending and business investment, contributing to a record trade surplus of $1.2 trillion (£896bn).

The staggering numbers come despite exports to the US suffering after Trump returned to office early last year and began raising tariffs. But the American decline was offset by shipments to the rest of the world, with soaring imports of Chinese goods leading some other governments to take action to protect local industries, in some cases raising import duties.

Trump and Chinese leader Xi Jinping have agreed to extend a truce in their bruising tariffs war, but China’s exports to the U.S. still fell 20% last year.

Lynn Song, chief economist for Greater China at Dutch bank ING said: “The key question is how long this engine of growth can remain the primary driver.

“Should more economies also start ramping up tariffs on China, as Mexico has done and the E.U. has threatened to do, eventually, a tighter squeeze will be seen.”

China’s leaders have repeatedly highlighted boosting domestic demand as a policy focus, but their effects have so far been limited. A trade-in program for drivers to replace older cars with more energy-efficient models, for example, has been losing steam in recent months.

However, growth slowed to a 4.5% rate in the last quarter of the year, officials said on Monday. That was the slowest quarterly growth since late 2022, when China was beginning to loosen stringent COVID-19 pandemic restrictions. The economy, the world’s second largest, grew at a 4.8% annual pace in the previous quarter.

China’s growth has dwarfed the rate the UK economy has increased over the past year under Labour, with the forecast for 2025 expected to be around 1.4%. The Office of National Statistics (ONS) said the gross domestic product (GDP) grew by 0.1%, after showing no growth in the three months to October.

Investments in artificial intelligence and other advanced technologies remain a key priority for China’s ruling Communist Party as it moves to boost self-reliance and rival the US. Meanwhile, many ordinary Chinese and small businesses are struggling with tough times and troubling uncertainty over jobs and incomes.

Kang Yi, head of China’s National Bureau of Statistics, said that China’s economy had sustained “steady progress in 2025 despite multiple pressures” and has “solid foundations” in countering risks.

Some economists and analysts believe China’s actual economic growth in 2025 was slower than official data suggest. The Rhodium Group, a think tank, said last month it expected China’s economy to grow only by 2.5% to 3% last year.

A slower annual expansion is expected for 2026. Deutsche Bank forecasts that China’s economy will grow about 4.5% in 2026.