China's Q2 GDP growth beats expectations with 5.2% expansion

China's GDP grew 5.2% in Q2, surpassing the average forecast of 5.1%. The country's economic growth for the first half of the year stood at 5.3%. Despite ongoing trade tensions with the US, China's economy has shown resilience.

China's economy has shown resilience in the second quarter, with the country's gross domestic product (GDP) growth rate for the period coming in at 5.2%, surpassing the average forecast of 5.1%. This performance is a testament to the economy's ability to navigate ongoing trade tensions with the United States.

The first half of the year saw China's GDP grow at a rate of 5.3%, indicating a strong start to the year despite the challenges posed by the trade dispute. Analysts attribute this resilience to a combination of factors, including a fragile U.S.-China trade truce and policy support from the Chinese government [1].

However, the second quarter's growth was not without its challenges. Trade tensions and a prolonged property downturn have been significant drags on demand, necessitating additional stimulus measures from the government. The world's second-largest economy has so far managed to avoid a sharp slowdown, but markets are bracing for a weaker second half of the year [1].

The GDP data for the second quarter is expected to show a 5.1% year-on-year growth rate, slowing from the first quarter's 5.4% growth rate. This projected pace still exceeds the 4.7% forecast in a Reuters poll in April and aligns with the official full-year target of around 5%. Analysts at Morgan Stanley expect the third-quarter growth to slow to 4.5% or lower, with the fourth quarter facing an unfavorable base effect, putting the annual growth target at risk [1].

The Chinese government has been proactive in its response to the economic challenges. It has ramped up infrastructure spending and consumer subsidies, alongside steady monetary easing. In May, the central bank cut interest rates and injected liquidity to cushion the economy from the impact of U.S. President Donald Trump's trade tariffs. However, analysts warn that stimulus alone may not be sufficient to tackle entrenched deflationary pressures [1].

China's exports regained momentum in June, with imports rebounding as factories capitalized on a fragile tariff truce between Beijing and Washington. The country's economic growth is forecast to cool to 4.6% in 2025 and further to 4.2% in 2026, according to a Reuters poll [1].

Investors are closely watching for signs of fresh stimulus at the upcoming Politburo meeting due in late July, which is likely to shape economic policy for the remainder of the year. Analysts expect a 10-basis point cut in the seven-day reverse repo rate and a similar cut to the benchmark loan prime rate (LPR) in the fourth quarter [1].

The Chinese government faces a delicate balancing act in its quest to cut production while maintaining employment stability in the face of a worsening labor market outlook. Expectations are growing that China could accelerate supply-side reforms to curb excess industrial capacity and find new ways to boost domestic demand [1].

References
[1] https://www.tradingview.com/news/reuters.com,2025:newsml_L4N3T902U:0-china-s-economy-set-to-slow-in-q2-as-pressure-from-us-tariffs-mounts/
[2] https://finance.yahoo.com/news/chinas-economy-set-slow-q2-230350964.html
[3] https://www.metal.com/en/newscontent/103421609