China's Economy Slows to 5.2% Growth in Q4 Amid Robust Annual Performance

China's economy grew at a robust 5.2% annual pace in the last quarter, despite slowing down from the previous quarter. The growth is attributed to a strong rebound in industrial production and retail sales, as well as an uptick in investment. However, the slowdown in the last quarter is a sign that the economy is facing challenges, and policymakers will need to take action to sustain growth.

China's economy grew at a robust 5.2% annual pace in the second quarter of 2025, according to recent data. This growth was driven by a strong rebound in industrial production and retail sales, as well as an uptick in investment. However, the slowdown in growth compared to the previous quarter signals ongoing economic challenges that policymakers must address.

Industrial production in China surged by 6.8% year-on-year in June 2025, marking the fastest growth since March [2]. This acceleration was driven by a recovery in manufacturing activity, which has been a key driver of the country's economic growth. Retail sales also showed signs of improvement, with a 4.2% increase in June, suggesting that consumer confidence may be returning.

Despite these positive signs, the economy faces significant headwinds. The slowdown in growth in the second quarter indicates that the economy is still grappling with deflationary pressures and weak consumer confidence. The property market has also been a major drag on the economy, with prices continuing to decline and sales remaining sluggish.

To address these challenges, policymakers are preparing to introduce further stimulus measures. Finance Minister Lan Foan announced on Saturday that China will issue 2.3 trillion yuan (€297 billion or $325.5 billion) in special bonds in the next three months to boost the economy [1]. This move is part of a broader fiscal stimulus package that includes lowering the debt ceiling for local governments and issuing ultra-long-term special treasury bonds.

The need for fiscal stimulus has been driven by a series of economic challenges, including a sharp downturn in the property market and weak consumer confidence. These factors have exposed the economy's over-reliance on exports, particularly in a time of heightened global trade tensions. To mitigate these risks, the government has also introduced a series of monetary policy measures, including interest rate cuts and increased liquidity for banks.

Looking ahead, investors will be closely watching the upcoming Politburo session in late July for any additional policy announcements. Analysts at Morgan Stanley anticipate that Beijing may roll out an extra fiscal package ranging from 500 billion to 1 trillion yuan starting towards the end of Q3 [3]. This package would be aimed at supporting growth in the face of ongoing trade disputes and a prolonged property slump.

However, the road to sustainable growth remains challenging. The job market is also a significant concern, with experts warning that any cuts to excess factory production could trigger major layoffs in a weakening job market [3]. Moreover, the ongoing trade war with the United States continues to pose a significant risk to the economy, with tariffs likely to remain high and constrain China's ability to rapidly expand global market share.

In conclusion, while China's economy showed signs of recovery in the second quarter, policymakers must remain vigilant to address the ongoing challenges. The upcoming fiscal stimulus package and potential policy announcements at the Politburo session will be crucial in determining the country's economic trajectory for the remainder of the year.

References:
[1] https://www.dw.com/en/china-announces-stimulus-plan-to-revive-economic-growth/a-70475952
[2] https://www.tradingview.com/news/te_news:470107:0-china-industrial-production-output-growth-at-3-month-high/
[3] https://www.mitrade.com/au/insights/news/live-news/article-3-958016-20250715