Key Facts
• On July 15, 2025, China’s National Bureau of Statistics released Q2 GDP data.
• GDP grew 5.2% year-on-year, down from 5.4% in Q1 but above the 5.0% target.
• Quarter-on-quarter growth slowed to 1.1% from 1.2% in Q1.
• U.S.-China trade tensions, including tariffs up to 145%, impacted growth.
• China raised tariffs to 125% in retaliation, causing a sharp drop in trade.
• In May 2025, both nations agreed to significantly reduce tariffs.
• Domestic demand was boosted by policies promoting appliance and vehicle purchases.
• Deflationary pressures persisted due to weak domestic demand.
Summary
China’s economy grew 5.2% year-on-year in Q2 2025, a slight slowdown from Q1’s 5.4% but exceeding the annual target of 5.0%. The U.S.-China trade conflict, marked by high tariffs, significantly impacted growth. In response, China implemented measures to stimulate domestic demand, including incentives for appliance and vehicle purchases. Despite these efforts, deflationary pressures remained. Both nations agreed to reduce tariffs in May 2025, but future trade relations remain uncertain.
