In the second quarter, when China faced a tariff war with the United States, some economic indicators such as gross domestic product (GDP) growth rate and industrial production exceeded market expectations, performing well. This is interpreted to be due to the continued investment within the country and an increase in exports.
On the 15th, China's National Bureau of Statistics announced that the GDP growth rate for the second quarter was recorded at 5.2%. This figure surpasses the market expectation of 5.1% surveyed by Reuters. Growth slightly slowed compared to the first quarter's 5.4%.
The National Bureau of Statistics identified the recovery in exports as the main driver of GDP growth in the second quarter. According to previously announced trade figures, exports from China increased by 8.1% year-on-year in April, when the tariff war with the United States began. However, the growth was limited to 4.8% in May, when the impact of the tariff war started; yet, after both countries agreed to a ceasefire and decided to withdraw most tariffs in the same month, exports recovered in June, with an increase of 5.8%.
In addition, the National Bureau of Statistics pointed to the rapid growth of advanced manufacturing and stable domestic consumption as major factors, noting that ▲ industrial transformation and robust exports ▲ continued expansion of investments in advanced manufacturing would consistently support GDP growth, with improvements expected to become more pronounced in the latter half of the year.
In June, retail sales reached 4.2287 trillion yuan (approximately 814.9974 trillion won), marking an increase of 4.8% year-on-year, but the growth rate slowed compared to the previous month (6.4% increase). It also fell short of Reuters' expected 5.4%. Industrial production increased by 6.8% year-on-year, exceeding the market estimate of 5.7%.
In the first half of this year, national investment in fixed assets was 24.8654 trillion yuan (approximately 479.33031 trillion won), an increase of 2.8% compared to the same period last year. The urban unemployment rate, which peaked at 5.4% in February, dropped to 5% in June.
Foreign news agencies analyzed that China's deflation (price decline) and housing market stagnation are becoming prolonged, leading to increased pressure for additional economic stimulus. Earlier, China supplied liquidity on a large scale in response to the 'tariff bomb' from the United States in May, and thanks to this economic stimulus, certain metrics related to manufacturing have shown some improvement.
U.S. CNBC noted, "This year, China's economy has maintained a generally solid foundation thanks to robust exports and support measures, but weak consumer price indices, a sluggish purchasing manager index, cautious credit trends, and a high unemployment rate among migrant workers reveal vulnerabilities."
It continued, "Many economists argue that new fiscal policies should be implemented to prepare for larger economic headwinds," adding that "to ensure more balanced and sustainable growth, structural reforms in China's fiscal plan, pension system, and financial institutional sector are necessary."