China's economy experienced a 5.2% year-on-year growth in Q2 2025, driven by government stimulus and a pause in the US-China trade war. The growth slightly fell short of the previous quarter's 5.4% but maintained a trajectory toward the government’s annual target of around 5%. Analysts caution that this growth may not be sustainable due to declining consumer confidence, deflation, and a persistent property crisis affecting demand. Additionally, China's share of global exports has grown significantly, presenting challenges in global trade dynamics.
"China achieved growth above the official target of 5% in Q2 partly because of front loading of exports," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
"The real estate crisis remains a major medium-term drag on local government budgets," said Dan Wang, economist at the Eurasia Group.
Investors are bracing for a weaker second half even as additional stimulus are expected to be considered at the upcoming Politburo meeting in July.
Chinese companies now account for 16% of global exports, double that of Germany, raising the stakes in an increasingly competitive global trade landscape.
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