China’s Economy Grows 5.2% Despite Trade War Pressures

Report by “Safarti Tarjuman” International News Desk

BEIJING — China’s economy grew at an annual rate of 5.2% in the second quarter of 2025, surpassing its official 5% target despite escalating trade tensions with the United States and signs of slowing domestic consumption.

Official figures released on Tuesday showed quarterly growth of 1.1%, slightly down from the 5.4% annual pace seen in the first quarter. For the first half of 2025 overall, China’s GDP expanded 5.3%, reflecting both the country’s economic resilience and its dependence on external demand to offset internal challenges.

Robust export performance remained a key driver of growth. In June, Chinese exports rose 5.8% year-on-year, accelerating from May’s 4.8%, buoyed by a temporary easing of punitive US tariffs as trade negotiations resumed.

However, analysts warn the rebound may be short-lived. A looming August 12 deadline for a new trade deal raises the risk of tariffs as high as 245% being reinstated, which could sharply curtail exports—one of China’s most vital growth engines.

Chinese manufacturers have also expanded offshore production to bypass trade barriers, underscoring the complex adjustments being made to sustain shipments despite the trade war’s pressures.

While exports have held up, China’s domestic demand continues to struggle. Official data revealed a 0.1% decline in consumer prices in the first half of 2025, reflecting persistent weakness in household spending.

Demographic trends—such as a declining and aging population—alongside a prolonged real estate crisis and the lingering economic effects of the COVID-19 pandemic have dampened consumer confidence and purchasing power.

The National Bureau of Statistics highlighted “steady growth with good momentum,” crediting proactive fiscal and monetary policies for stabilizing overall activity. But underlying data suggests continued headwinds for sustainable domestic-led expansion.

Independent economists have cast doubt on the strength suggested by official figures.

Zichun Huang of Capital Economics pointed out that fixed-asset investment—covering infrastructure and factory equipment—grew only 2.8% in the first half, with signs of deceleration in recent months.

Capital Economics’ alternative activity tracker suggests China’s actual GDP growth was below 4% year-on-year in April and May. The firm forecasts full-year 2025 growth of just 3.5%, warning that political pressure to meet official targets may mask underlying softness.

“The economic outlook for the rest of the year remains challenging,” Huang wrote, noting that published figures may be artificially boosted to preserve confidence.

Beijing has set its official 2025 growth target at 5%, the same as last year. But risks remain substantial.

A failure to secure a new trade agreement with Washington could see tariffs snap back, hitting exports and employment. Meanwhile, structural issues such as an aging population, high local government debt, and weak consumer demand will require longer-term policy solutions.

Chinese authorities have pledged more proactive support to maintain stability, but economists warn that without meaningful reforms to boost domestic consumption, the world’s second-largest economy faces an uphill battle to sustain growth at its targeted pace.

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