According to data released Tuesday by the National Bureau of Statistics, China’s economy expanded 5.2% year-on-year in Q2, down from 5.4% in Q1. On a quarterly basis, growth reached 1.1%, modestly ahead of the 0.9% forecast.

Despite headline resilience, underlying indicators revealed softening momentum. Retail sales rose only 4.8% in June — the weakest since January-February — while property investment continued to decline. Consumer sentiment remains low, with many families reporting salary cuts and cost-saving measures.

“Despite a strong first half, the outlook is set to sour in the second half as export frontloading fades and U.S. tariffs take full effect,” said Wei Yao, economist at Societe Generale.

Tariffs And Property Crisis Cloud Outlook

China’s property market remains a major drag. New home prices fell at the fastest monthly pace in eight months, and fixed-asset investment grew only 2.8% in the first half, down from 3.7% in the January-May period. Industrial output offered a rare bright spot, rising 6.8% in June.

The threat of renewed tariffs from the United States — under President Trump’s trade agenda — has prompted Beijing to front-load exports, but analysts say this buffer is fading. “Q3 growth is at risk without stronger fiscal stimulus,” warned Dan Wang of Eurasia Group.

Economists at ANZ raised their 2025 GDP forecast to 5.1% from 4.2%, citing the possibility of increased stimulus. However, a Reuters poll suggests growth will slow to 4.5% in Q3 and 4.0% in Q4, potentially missing the government’s 5% annual target.

China’s leadership is expected to address further economic support at the late-July Politburo meeting, with possibilities including more infrastructure spending, subsidies, and monetary easing.