China Records 5.2% Economic Growth In Second Quarter Of 2025

China’s economy expanded by more than five percent in the second quarter of 2025, buoyed by strong export activity, according to official figures released Tuesday.

However, analysts caution that the country still faces significant challenges, particularly in stimulating consumer demand.

The 5.2 percent growth from April to June, reported by Beijing’s National Bureau of Statistics (NBS), “matched a prediction by an AFP survey of analysts and topped an official growth goal for the year set by the government”.

Still, it was a slight decline from the 5.4 percent recorded in the first quarter, which had been driven by a surge in exports ahead of new U.S. tariffs.

“The national economy withstood pressure and made steady improvement despite challenges,” said NBS deputy director Sheng Laiyun during a news conference.

“Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development and high-quality development made new strides,” he added.

The data offers rare optimism for Chinese policymakers, who have been grappling with efforts to jumpstart the economy amidst global headwinds. These include trade disruptions stemming from U.S. President Donald Trump’s renewed tariffs, which now affect China and most other major trading partners since he returned to office in January. The tariffs come at a time when China is becoming increasingly dependent on exports to support growth.

Though the U.S. and China reached a framework for a deal during talks in London last month, analysts remain cautious, citing ongoing tensions and “lingering uncertainty”.

Despite the headline growth, market reactions were mixed. Hong Kong gave up early gains, while Shanghai slipped into negative territory. Some economists questioned the true strength behind the figures.

“The figures probably still overstate the strength of growth,” said Zichun Huang, China Economist at Capital Economics.

“With exports set to slow and the tailwind from fiscal support on course to fade, growth is likely to slow further during the second half of this year.”

Retail sales rose just 4.8 percent in June compared to the same month last year, falling short of Bloomberg’s forecast. This underperformance suggests that recent initiatives to boost consumption have not had the desired impact.

Beijing is attempting to shift toward a consumption-driven economy, moving away from traditional growth engines such as infrastructure, manufacturing, and exports. However, sluggish consumer activity continues to challenge that transition.

Factory output rose by 6.8 percent, exceeding expectations and reflecting solid overseas demand. Yet analysts warn that this export strength may be adding to deflationary pressure.

“Recent efforts to boost spending, such as the broadening of the consumer goods trade-in scheme earlier this year, did temporarily lift retail sales,” said Sarah Tan, economist at Moody’s Analytics.

“However, this support proved unsustainable, with funding reportedly drying up in several provinces. The scheme’s limitations highlight the need for policymakers to address the deeper structural challenges behind consumer caution.”

Inflation remains a concern. While consumer prices edged higher in June, they barely broke a four-month deflationary streak. Meanwhile, producer prices fell at their fastest rate in nearly two years.

“The economy posted a solid first half, supported by resilient exports, though this momentum is contributing to deepening deflationary trends,” noted Louise Loo, Head of Asia Economics at Oxford Economics. “The cost of strong exports is more deflation,” she added.

Tensions with Washington also persist, despite the agreement reached in London. At Tuesday’s briefing, Sheng reiterated China’s resilience: “We are resolved to handle our own affairs well,” he said, referring to “high tariffs” and “pressure in the external environment”.

Looking ahead, Yue Su, principal economist for China at the Economist Intelligence Unit, told AFP the data showed “notable resilience” but warned that “trade frontloading will overdraw demand for the second half.”