China’s economy continued to lose momentum in the final quarter of 2025, reinforcing the case for more extensive stimulus measures in the upcoming year, analysts at ING said in a report released on Monday.

The commentary follows the release of data showing that growth in industrial production and retail sales in November fell short of expectations. In addition, investments in fixed assets declined more sharply than anticipated for the second consecutive month, an alarming signal that businesses are beginning to tighten their belts.

According to ING, weaker retail sales can largely be attributed to the delayed effects of subsidies and trade-in programs launched by Beijing at the end of 2024. While these measures initially stimulated consumption, their impact quickly faded, requiring an expansion of the programs to sustain demand.

Industrial production remains one of the few bright spots, with steady external demand expected to continue partially offsetting domestic weaknesses. However, analysts warn that the struggling property market and sluggish consumer spending are likely to be significant drags on the economy in 2026.

The ING analysts cautioned that the more complex challenges for China would emerge starting next year and continue into the future. They highlighted that the most pressing concern for the country is the erosion of trust, which poses a risk of becoming a chronic issue.

New data comes on the heels of disappointing inflation statistics released last week, showing that consumer inflation remains subdued and that producer inflation contracted for the 38th consecutive month in November.

According to ING, policymakers have considerable work ahead if domestic demand is to become the key driver of growth in 2026, as planned.

Recent statements from the Politburo and the Central Economic Work Conference reaffirm that stimulating domestic demand remains a priority. However, few concrete measures have been announced, aside from promises to enhance fiscal support.

ING suggests that a GDP growth target of around 5% for 2025 is still achievable. Nevertheless, amid weakening domestic demand, the risk of a downturn is increasing, both in the short and long term.