China's resilient economy relies on exports, but rising trade barriers and domestic issues pose significant challenges, warns Morningstar DBRS.
China's economy has shown resilience in recent years, with exports offsetting weak domestic demand and sustaining growth, reports Toronto rating agency Morningstar DBRS. The IMF forecasts GDP growth of 4.5 percent in 2026 after an average of 5.1 percent between 2023 and 2025.
Exports have continued to expand despite historically high US tariffs, with China posting a record trade surplus of US$1.2 trillion in 2025. Producers have diversified markets and strengthened competitiveness, helping to maintain global share. Growth has been strongest in higher value-added sectors such as machinery, electronics, electric vehicles, and other high-tech manufacturing.
Morningstar DBRS stated that China's 'A' credit rating with a Stable trend reflects the economy's adaptability. Senior Vice President Rohini Malkani noted that robust exports have sustained growth but have masked persistent weakness in domestic demand.
The agency warned that export-led resilience may not be durable. Rising global concerns over China's export surge and excess capacity could prompt more trade barriers from partners beyond the US. This would add to existing headwinds, including rising debt, property sector weakness, and aging demographics.
