China\’s Q2 GDP jumps 5.2% amid trade war pressures, AFP poll reveals

China Rebounds from Export Surge in Q2

China’s economy expanded by more than five‑percent in the second quarter, a rebound largely driven by a sharp increase in exports. Analytic forecasts for Q2 suggest a 5.2 % growth year‑on‑year, but many economists point to a potential slowdown in the final half of the year amid a U.S. tariff campaign.

Export Surge Fuels Growth

• Exports reached record highs last year, providing a cushion as global pressures mounted.
• Foreign buyers front‑loaded purchases in April to hedge against anticipated trade turbulence under the new U.S. tariff regime.
• Alicia Garcia‑Herrero, Chief Economist for Asia Pacific at Natixis, noted that April exports were particularly strong due to heightened U.S. import tariffs.

Deflationary Pressures Persist

Consumer prices edged up in June, barely breaking a four‑month deflationary dip. Yet factory gate prices fell at the fastest pace in nearly two years, with the producer price index declining 3.6 percent year‑on‑year. Betty Wang of Oxford Economics warned that deflationary pressures remain stubborn.

Domestic Demand Remains Weak

Economist Sarah Tan of Moody’s Analytics warned that external trade alone cannot offset domestic demand drag. Tan stressed the need for policy support and structural reform to bolster household incomes and consumer confidence. Without stronger, sustained policy measures, China risks losing momentum in the second half of the year.

Policy Measures Fall Short

Beijing introduced a consumer goods trade‑in subsidy scheme that briefly lifted retail activity, but Tan argued it did little to address core causes of consumer caution such as stagnant income growth and weak job security.

Official Growth Target for 2025

• Beijing is targeting an overall expansion of around five percent this year.
• First‑quarter growth came in at 5.4 percent, beating forecasts.
• Economists Larry Hu and Yuxiao Zhang at Macquarie asserted that domestic demand remains weak, leading to deflationary and profitless growth.

Future Outlook

Some experts argue Beijing should shift from infrastructure, manufacturing and export‑led growth to a model driven more by domestic consumption. Policymakers are unlikely to enact a deep stimulus unless exports slow significantly, as they only aim to hit the five‑percent target.

Key Takeaways

• Strong Q2 exports underpin a 5.2% GDP growth.
• Deflationary pressures and weak domestic demand threaten momentum.
• Effective policy reform and consumer confidence are essential for sustained growth.