China's economy grows at a robust pace as trade truce eases pressure
from US tariffs
[July 15, 2025] By
ELAINE KURTENBACH
BANGKOK (AP) — China's economy slowed slightly in the last quarter as
President Donald Trump’s trade war escalated, but it still expanded at a
robust 5.2% pace, the government said Tuesday.
That compares with 5.4% annual growth in January-March. The government
said Tuesday that in quarterly terms, the world’s second largest economy
expanded by 1.1%.
In the first half of the year, the Chinese economy grew at a 5.3% annual
pace, the official data show. However, some analysts said actual growth
may have been significantly slower.
Zichun Huang of Capital Economics noted that investments in fixed assets
such as factory equipment rose only 2.8% in the first half of the year,
implying 2.9% annual growth in May and a mere 0.5% increase in June. The
5.2% growth rate overstates the pace of expansion by about 1.5
percentage points, she said.
Capital Economics' activity proxy shows growth in China's gross domestic
product, or GDP, at less than 4% year-on-year in April and May, Huang
said, forecasting annual growth of 3.5% for full-year 2025.
“The economic outlook for the rest of the year remains challenging,”
Huang wrote in a report. She added though that “political pressure to
meet annual growth targets, even if only on paper, means that published
GDP growth will be much higher.”
A key factor behind the latest upbeat data was strong exports. On
Monday, China reported that its exports accelerated in June, rising 5.8%
from a year earlier, up from a 4.8% increase in May.
Production of high-tech products, vehicles and electrical machinery and
equipment rose by about 10% or more from a year earlier.
A reprieve on painfully high tariffs on Chinese exports to the United
States prompted a rush of orders by companies and consumers as the two
sides resumed trade talks. Chinese companies also have expanded exports
to and offshore manufacturing in other countries such as Vietnam,
helping to offset the impact of higher tariffs imposed by the Trump
administration.
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People take escalators as shoppers, at right downstairs, select
clothing at a fashion boutique store inside a shopping mall, in
Beijing on Sunday, July 13, 2025. (AP Photo/Andy Wong)
 “Generally speaking, with the more
proactive and effective macro policies taking effect ... the
national economy maintained steady growth with good momentum,
showcasing strong resilience and vitality,” the report by the
National Bureau of Statistics said.
However, a 0.1% decline in consumer prices in the first half of 2025
showed continuing weakness in domestic demand, a long-term challenge
for the ruling communist party as the Chinese population declines
and ages. Those troubles deepened during and after the COVID-19
pandemic.
Falling property prices and slowing retail sales also are concerns,
said Lynne Song of ING Economics.
Price cutting by Chinese manufacturers to help compete in overseas
markets is adding to deflationary pressures that ultimately erode
their competitiveness, Louise Loo of Oxford Economics said in a
report.
Chinese leaders have set a growth target of 5% for this year, in
line with last year's growth. A resumption of U.S. tariffs of up to
245% if Washington and Beijing fail to meet an Aug. 12 deadline for
a new trade deal could derail the recovery in exports, a major
driver of growth and employment.
___
AP Researcher Yu Bing in Beijing contributed.
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