China’s Economy and Markets in 2025: Steady Growth Amid Global Challenges and Policy Support

Introduction

China’s economy has demonstrated remarkable resilience and steady growth momentum in 2025 despite ongoing challenges from global trade tensions, domestic structural issues, and external uncertainties. Supported by targeted fiscal and monetary policies, industrial strength, and export demand, the country is navigating a complex economic landscape with cautious optimism.

Solid Economic Growth in Early 2025

China’s Gross Domestic Product (GDP) expanded by approximately 5.3 to 5.4 percent year-on-year in the first half of 2025, maintaining pace with government growth targets. This growth was underpinned by robust industrial output, export strength, and infrastructure investment, offsetting slower domestic consumption and a still-struggling real estate sector. The National Bureau of Statistics reported that China reached a GDP of around RMB 66 trillion (about US$9.2 trillion) by mid-year.

Industrial and Export Performance

Industrial production surged by over 6 percent in H1 2025, reflecting strong manufacturing activity and export volumes. Export growth was buoyed by frontloading shipments in anticipation of trade policy uncertainties and demand from key global markets. Despite tariff challenges, firms found ways to sustain supply chains and increase shipments, contributing positively to China’s trade balance.

Consumption and Real Estate Challenges

While industrial and export sectors performed well, domestic consumption showed moderate improvement but remained below pre-pandemic levels. Retail sales grew by roughly 5 percent year-on-year, signaling cautious consumer spending especially in big-ticket items. The property market remained weak, especially in lower-tier cities, with new housing sales and real estate investment continuing to decline, putting a drag on growth and consumer confidence.

Policy Measures and Fiscal Support

Chinese authorities deployed proactive macroeconomic policies to counterbalance economic headwinds. This included interest rate cuts and expanded fiscal spending focused on infrastructure projects and consumer subsidies. The government increased support for social insurance schemes and consumer goods trade-in subsidies to stimulate demand. These measures aim to sustain growth and stabilize employment in a fragile global environment.

Financial Markets and Investment Trends

China’s equity markets reflected a mixture of cautious optimism and volatility. The Shanghai Composite Index remained relatively steady with gains fueled by technology and industrial stocks, including notable revenue growth by firms such as Tencent. However, private sector investment contracted slightly as companies remained cautious amid geopolitical tensions and regulatory uncertainties. Foreign direct investment also experienced a decline, signaling continued global apprehension.

Outlook and Risks

Looking ahead, economists project growth to moderate to around 4.5 percent by the end of 2025, with potential further declines in 2026 due to ongoing trade restrictions and global uncertainties. While government stimulus and reforms provide buffers, challenges such as subdued consumer confidence, real estate weakness, and geopolitical risks may temper recovery. Policymakers remain prepared to introduce additional support if needed to maintain macroeconomic stability.