China’s economy expanded by 5.2 per cent year-on-year in the second quarter, matching analyst expectations but revealing growing imbalances between robust exports and sluggish domestic demand, official data showed Tuesday.
The National Bureau of Statistics reported the growth rate met both an AFP analyst survey forecast and the government’s annual target, though it marked a slowdown from Q1’s 5.4 per cent expansion. Deputy Director Sheng Laiyun acknowledged the mixed performance:
“The national economy withstood pressure and made steady improvement despite challenges. Production and demand grew steadily, employment was generally stable, household income continued to increase, new growth drivers witnessed robust development and high-quality development made new strides.”
Factory output surged 6.8 per cent in June, exceeding estimates as Chinese manufacturers benefited from strong overseas demand. However, retail sales grew just 4.8 per cent – below Bloomberg’s consensus forecast – signaling persistent weakness in consumer spending despite government stimulus efforts.
“Recent efforts to boost spending, such as the broadening of the consumer goods trade-in scheme earlier this year, did temporarily lift retail sales,” noted Moody’s Analytics economist Sarah Tan. “However, this support proved unsustainable, with funding reportedly drying up in several provinces.”
The export-driven growth comes amid escalating trade tensions, with U.S. President Donald Trump imposing new tariffs since January. While China and the U.S. reached a framework agreement in London last month, Sheng acknowledged “high tariffs” and “pressure in the external environment.”
Capital Economics’ Zichun Huang warned: “The figures probably still overstate the strength of growth. With exports set to slow and the tailwind from fiscal support on course to fade, growth is likely to slow further during the second half of this year.”
Oxford Economics’ Louise Loo highlighted a troubling side effect: “The economy posted a solid first half, supported by resilient exports, though this momentum is contributing to deepening deflationary trends. The cost of strong exports is more deflation.”
Recent data showed factory gate prices falling at their fastest rate in nearly two years, while consumer prices barely edged out of deflationary territory in June.
Economist Intelligence Unit’s Yue Su told AFP the Q2 performance showed “notable resilience” but cautioned that “trade frontloading will overdraw demand for the second half,” suggesting tougher months ahead for Beijing’s economic planners.
Markets reacted cautiously, with Hong Kong paring early gains and Shanghai dipping into negative territory following the release.
