China’s National Bureau of Statistics released its second-quarter GDP data for 2025 on July 15, showing figures slightly above market expectations. GDP grew 1.1% from the previous quarter—beating the estimated 0.9%—although it was a touch lower than Q1’s 1.2%. On a year-over-year basis, the economy expanded by 5.2%, just above the forecasted 5.1%, but marginally below Q1’s 5.4% growth rate.
For the first half of the year, China’s economy grew 5.3%, in line with the government’s annual target. While headwinds such as weak domestic consumption and growing global uncertainty remain, the Q2 numbers suggest that Beijing’s efforts to stabilize growth are starting to take hold.
On the consumption front, retail sales in June rose 4.8% year-over-year, down from May’s 6.4%, indicating that household spending remains lackluster. Investment figures also fell short—fixed asset investment grew just 2.8% in the first half, compared to a 3.7% increase from January to May. The property sector remains under pressure, with real estate investment plunging 11.2% year-on-year, continuing to weigh down the broader economy.
To boost domestic demand, authorities have rolled out a 300 billion yuan trade-in subsidy program, encouraging households to replace old cars and home appliances. However, early signs suggest that the policy’s impact may be losing momentum. Analysts believe more supportive measures are needed—especially those aimed at increasing household income and ensuring job stability—to unlock stronger consumer spending.
Externally, while U.S.-China trade tensions appear to be easing slightly, Washington’s tariff threats remain on the table. Meanwhile, uneven global recovery trends could further complicate China’s export outlook in the second half.
Market reactions have been relatively muted. The yuan has held steady against the U.S. dollar, and the Australian dollar hovered around 0.6550 following the release, suggesting investors remain cautious about China’s economic trajectory.
Looking ahead, analysts warn of growing downside risks in the second half. With both domestic and external pressures building, further policy support—such as increased fiscal spending or credit easing—may be necessary to keep growth on track and rebuild confidence among businesses and consumers alike.
