China’s economy is officially expanding. GDP rose 5.2% in the second quarter of 2025, slightly above expectations. Retail sales jumped 6.4% in May. Exports have gained short-term momentum thanks to the recent trade deal with the United States.

Official figures showed modest growth in the second quarter as exports shifted to other countries and Beijing invested in manufacturing and infrastructure.

China’s economy slowed less than expected in the second quarter in a show of resilience against U.S. tariffs, though analysts warn that weak demand at home and rising global trade risks will ramp up pressure on Beijing to roll out more stimulus.

China’s humming factories threw a lifeline to an economy struggling with weak demand in the second quarter. That’s also given policymakers space to fight deflation — if they choose to do more than just hitting their growth target.

A surge of exports from Chinese manufacturers supported the growth, as customers and producers alike took advantage of the U.S.-China trade war ceasefire.

China's producer deflation deepened to its worst level in almost two years in June as the economy grappled with uncertainty over a global trade war and subdued demand at home, piling pressure on policymakers to roll out more support measures.

China’s economy grew at a slower clip in the second quarter, as trade tensions with the U.S. rattled an economy already mired in deflation and a years-long housing downturn, raising pressure on Beijing to step up stimulus to underpin growth.

Producer prices fell the most in nearly two years in June, while consumer goods prices also fell month-on-month.

Kganyago also warned that if implemented, tariffs are likely to impact the agricultural and automotive sectors, boding badly for economic activity.

Deflation creates an illusion of strong economic growth.