China’s Q2 GDP Grows 5.2% Amid Strong Export Tailwinds, Cautious Policy Outlook Ahead

On Tuesday, China’s National Bureau of Statistics released data showing that GDP grew 5.3% year-on-year in the first half of 2025, with Q2 growth clocking in at 5.2%, slightly down from 5.4% in Q1. On a quarterly basis, GDP rose 1.1%.

By sector:

 

• Primary industry (agriculture) added CNY 31.17 trillion, up 3.7%;

• Secondary industry (industrial) rose 5.3% to CNY 239.05 trillion;

• Tertiary industry (services) led growth at 5.5%, contributing CNY 390.31 trillion.

The uptick was fueled in part by resilient export performance, buoyed by a mid-May trade truce with the U.S., which saw tariffs on Chinese goods drop from 145% to 55%. The truce—set to expire in mid-August—has bought some breathing room, and ongoing fiscal support continues to bolster domestic demand.

Key indicators:

 

• Industrial output rose 6.4%, with agriculture (planting) up 3.7%;

• Retail sales grew 5.0%, an acceleration from Q1;

• Services added momentum, expanding 5.5%, up 0.2 percentage points from Q1;

• Fixed asset investment (exclude rural households) increased 2.8%, but stripping out real estate investment, the growth was 6.6%;

• Total imports and exports climbed 2.9% to CNY 217.88 trillion.

With growth broadly on track, analysts expect no major stimulus in the near term. Economists at Citi noted the upcoming Politburo meeting later this month could signal a “wait-and-see” approach, keeping the option open for targeted, small-scale support rather than sweeping measures.

Meanwhile, the People’s Bank of China (PBOC) has already begun shifting toward a more neutral stance：dropping its pledge to cut rates and inject liquidity, and instead vowing to “adjust policy intensity and timing with flexibility.”

In short, China’s economy is holding steady—not booming, but not breaking—as policymakers tread carefully in a volatile global environment.

Data Source: https://www.stats.gov.cn/sj/zxfb/202507/t20250715_1960414.html

China’s Exports Beat Expectations in June Following US Tariff Truce

China’s exports rebounded strongly in June, surpassing analysts’ forecasts following a tentative trade deal with the United States. Official data released on Monday (July 14) from the General Administration of Customs showed that exports increased 5.8% year-on-year, outpacing the 5% growth projected by economists surveyed by Bloomberg.

Imports also showed resilience, posting 1.1% growth in June—the first positive figure this year—beating the anticipated 0.3% increase.

In the first half of the year, exports in high-growth sectors such as lithium batteries and wind turbines surged more than 20%. Meanwhile, China has consolidated its position in the global industrial robotics market, rising to become the second-largest exporter last year and posting a remarkable 61.5% growth in exports in the first half of 2025.

According to Zichuan Huang, China economist at Capital Economics, the short-term boost from the US-China tariff truce provided much-needed relief. However, she cautioned, “Tariffs are likely to remain elevated, and Chinese manufacturers face increased constraints on their ability to expand global market share by cutting prices.”

As a result, Huang predicts a slowdown in export growth in the coming quarters, potentially exerting additional downward pressure on China’s overall economic growth.

Speaking at a press conference on Monday, customs official Wang Lingjun expressed optimism about future bilateral cooperation, stating China hopes “the US will continue to work together with China towards the same direction,” as reported by state broadcaster CCTV.

Last month’s export rebound was fueled significantly by a thaw in US-China trade tensions. Exports to the United States alone soared 32.4% in June, a sharp turnaround from the previous month’s decline, following progress made during recent bilateral negotiations in London.

As the initial momentum of June’s export growth eases, all eyes remain on the ongoing negotiations between the world’s two largest economies—negotiations that may determine the trajectory of global trade and economic stability for the remainder of 2025.

Data Source: http://www.customs.gov.cn/customs/302249/zfxxgk/2799825/302274/302275/6623728/index.html

China Auto Sales Accelerate in June, But EV Competition Heats Up

China’s auto market notched its fifth consecutive month of growth in June, as passenger car sales rose 18.6% year-on-year to 2.1 million units, according to data from the China Passenger Car Association (CPCA) released July 8. That marked a significant acceleration from May’s 13.9% gain. For the first half of 2025, cumulative sales climbed 11.2% to 11.1 million vehicles.

Driving much of this growth was the continued surge in electric vehicles (EVs) and plug-in hybrids, which accounted for 52.7% of total car sales in June—up sharply from 28.2% a year earlier. EV and PHEV sales rose 29.7% year-on-year, extending momentum in the sector.

Yet beneath the headline figures, signs of cooling demand and intensifying competition are emerging among automakers. EV giant BYD, despite continuing to post gains, saw its sales growth slow to 11% in June, down from 14.1% in May. Li Auto reported a sharp 24.1% sales drop, reversing a 16.7% rise the month before—raising eyebrows given its reputation as one of the few consistently profitable EV makers in China.

Geely Auto, another major player, raised its full-year sales target by 11% to 3 million units, but its growth pace also softened to 42%, down from 46% in May. Meanwhile, Tesla’s China sales staged a modest rebound, rising 3.7% in June after a steep 30% decline in May. The turnaround followed a rapid production ramp-up for its refreshed Model Y at the Shanghai Gigafactory, reportedly reaching full output in just six weeks.

Despite the overall growth, Cui Dongshu, Secretary-General of the CPCA, warned of a looming “big dilemma” in the sector. “If competition escalates into a life-or-death struggle, some automakers may not survive,” he cautioned.

Regulators have echoed similar concerns. Amid weak domestic demand and heightened trade tensions—particularly with the US—Chinese authorities have urged automakers to avoid deepening the ongoing price war, which is fueling fears of overcapacity and unsustainable market practices.

Starbucks China Reportedly Weighing Partial Selloff as Competition Heats Up

Starbucks may be brewing a major shift in its China strategy. Multiple media outlets, citing informed sources, report that the coffee giant has received several acquisition proposals for its China business. While Starbucks is expected to retain a 30% equity stake, the rest could be split among several investors—each holding less than 30%—allowing Starbucks to maintain operational control in its most important international market.

Valuations of the China business reportedly hover around $9 billion (approximately CNY 64.6 billion), underscoring the scale and importance of Starbucks’ presence in the region—even as it navigates mounting pressure from faster-growing local rivals.

At the forefront of that competitive heat is Luckin Coffee, which continues to expand aggressively. In Q1 2025, Luckin reported revenue of CNY 8.87 billion, a 41.2% year-on-year increase. Its self-operated stores alone generated CNY 6.78 billion, while franchise revenue grew 38% to CNY 2.08 billion. The chain ended March with a staggering 24,097 stores, nearly three times Starbucks’ footprint in China.

In contrast, Starbucks China reported Q1 revenue of $739.7 million (roughly CNY 5.32 billion), up just 5% year-on-year. Same-store sales were flat: a 4% increase in transaction volume was offset by a 4% drop in average ticket size. The company operated 7,758 stores across China at the end of the quarter.

China’s coffee market is evolving rapidly, and even the biggest players are rethinking their game plans.

China’s “New Farmers” Go Live as E-Commerce Reshapes Rural Agriculture

At 56, Gao Chaorong knows how to grow a solid crop of sweet potatoes, peanuts, and wheat. But in today’s China, good produce isn’t enough—it also needs a good WiFi connection. To keep her harvest from rotting in the fields, Gao is back in school, this time not for farming techniques but for a crash course in livestreaming.

Gao is part of a fast-growing wave of China’s “new farmers”—a tech-savvy generation of rural entrepreneurs tapping into the country’s billion-strong internet user base to sell directly to consumers. Armed with smartphones and tripods, they’re bypassing traditional distribution networks and heading straight to Douyin (China’s version of TikTok), Taobao Live, and Xiaohongshu to pitch their produce, one livestream at a time.

It’s not just a grassroots movement. Local governments are leaning in, too. In Shandong’s Pingdu city, Communist Party cadre Chen Xichuan has been tasked with setting an example—helping local farmers embrace livestreaming to keep up with shifting consumer habits. “It’s been harder for farmers to sell their produce, especially offline,” Chen noted.

The momentum is striking: the number of rural livestreamers on Douyin jumped 52% in the past year, according to the platform. Meanwhile, on Xiaohongshu, the hashtag “新农人 (new farmers)” has racked up more than 227 million views, turning once-anonymous farmers into online influencers.

What’s behind the rise? China’s flattening out economy and shifting consumption patterns have made it tougher for rural producers to thrive using traditional offline channels. At the same time, consumers—especially younger urbanites—are increasingly drawn to “origin stories,” niche products, and interactive shopping experiences. Livestreaming gives rural sellers a direct connection to buyers, a chance to build trust, and most importantly, a chance to survive.