GDP, Trade, and FDI Highlights

China’s economy grew 5.3 percent year‑on‑year in H1 2025, driven by robust industrial output, export strength, and targeted investment—though domestic consumption, real estate, and private investment lag behind.
The key challenge ahead is turning headline momentum into sustained, broad‑based recovery, especially by boosting household demand and investor confidence amid external uncertainty.

China’s economy expanded by 5.3 percent year-on-year in the first half of 2025, outperforming expectations and reflecting the country’s steady recovery momentum amid a volatile global environment. Official data released by the National Bureau of Statistics (NBS) on July 15 showed that gross domestic product (GDP) reached RMB 66.05 trillion (approximately US$9.24 trillion) in the January–June period, with the second quarter growing by 5.2 percent year-on-year and 1.1 percent quarter-on-quarter. 

Growth was broad-based, led by a 6.4 percent increase in industrial output and solid contributions from the services sector, which expanded 5.5 percent year-on-year. Meanwhile, retail sales grew by 5.0 percent, and fixed asset investment rose 2.8 percent over the same period, with a particular boost from manufacturing-related spending. Per capita disposable income also saw real gains, rising 5.4 percent after accounting for inflation. 

These results mark a “hard-won achievement,” according to NBS Deputy Head Sheng Laiyun, given mounting external pressures in the second quarter and persistent uncertainty in the global economic environment. He emphasized that China’s proactive macroeconomic policies have underpinned stable progress and outperformance in several key indicators. 

In this article, we take a closer look at China’s major economic indicators for the first half of 2025, assess the resilience of its growth drivers, and explore the risks and policy signals shaping expectations for the remainder of the year. 

China’s economy in H1 2025: Key indicators 

Manufacturing 

China’s industrial sector continued to deliver steady growth in the first half of 2025, led by strong expansion in manufacturing, particularly in high-tech and equipment-related industries. The data reflects improving business activity, even as headline indicators point to mixed momentum across different segments of the economy. 

The value-added output of industrial enterprises above the designated size (those with an annual main business income above RMB 20 million, or US$2.7 million) grew by 6.4 percent year-on-year in the first six months of 2025. Within the secondary sector: 

• Manufacturing output expanded by 7.0 percent, remaining a key growth driver; 

• Mining output increased by 6.0 percent; and 

• Electricity, heat power, gas, and water production and supply rose by 1.9 percent year-on-year. 

Notably, strategic sectors outperformed: 

• Value-added output of equipment manufacturing grew 10.2 percent year-on-year; 

• High-tech manufacturing expanded 9.5 percent year-on-year. 

These growth rates outpaced the industrial average by 3.8 and 3.1 percentage points, respectively, highlighting ongoing upgrades to China’s industrial base. 

The breakdown by ownership type revealed broad-based improvements across the board. State-holding enterprises experienced output growth of 4.2 percent, while shareholding enterprises expanded by 6.9 percent. Foreign-invested enterprises, including those from Hong Kong, Macao, and Taiwan, also saw growth of 4.3 percent. Private enterprises demonstrated strong performance with a 6.7 percent increase, reflecting a generally positive trend across different ownership structures.

Production of key advanced manufacturing products also posted rapid gains: 

• 3D printing devices: up 43.1 percent year-on-year; 

• New energy vehicles (NEVs): up 36.2 percent year-on-year; 

• Industrial robots: up 35.6 percent year-on-year. 

In June alone, industrial output grew 6.8 percent year-on-year and 0.5 percent month-on-month, signaling a modest acceleration entering the second half of the year. 

Meanwhile, business sentiment showed signs of cautious optimism. The Manufacturing Purchasing Managers’ Index (PMI) in June rose slightly to 49.7 percent, up 0.2 percentage points from the previous month, though still below the expansion threshold of 50 percent. The Production and Operation Expectation Index stood at 52.0 percent, reflecting moderate confidence about short-term prospects.  

However, industrial profitability remained under pressure. In the first five months of 2025, total profits of industrial enterprises above the designated size reached RMB 2.72 trillion (US$370.4 billion), representing a 1.1 percent decline year-on-year. 

Services 

China’s services sector sustained a stable recovery in the first half of 2025, supported by continued strength in technology-driven and business-oriented services. The pace of growth slightly accelerated compared to the first quarter, suggesting improved momentum across key sub-sectors. 

In the first half of the year, the value-added output of the services sector increased by 5.5 percent year-on-year, up 0.2 percentage points from the first quarter. 

Among major industries, the strongest growth was recorded in: 

• Information transmission, software, and IT services: up 11.1 percent year-on-year; 

• Leasing and business services: up 9.6 percent; 

• Transport, storage, and postal services: up 6.4 percent; 

• Wholesale and retail trade: up 5.9 percent. 

In June, the Index of Services Production rose by 6.0 percent year-on-year, maintaining a solid growth trajectory. Notable gains were seen in: 

• Information transmission, software, and IT services: up 11.6 percent; 

• Leasing and business services: up 8.4 percent; 

• Finance: up 7.3 percent; 

• Wholesale and retail trade: up 6.9 percent. 

Revenue figures further highlighted the sector’s resilience. In the first five months, business revenue of service enterprises above the designated size grew by 8.1 percent year-on-year, reflecting rising demand and improved operating conditions. 

Service sector sentiment remained cautiously optimistic. In June, the Business Activity Index for Services stood at 50.1 percent, indicating mild expansion, while the Business Activity Expectation Index reached 56.0 percent, signaling positive outlooks among firms. 

Several service industries reported strong expectations for future growth, particularly: 

• Telecommunications, broadcasting, and satellite transmission; 

• Internet software and IT services; 

• Monetary and financial services; 

These sectors remained in the high expansion range of 55.0 percent and above, reinforcing their role as key contributors to the digital and financial transformation of the Chinese economy. 

Consumption and retail sales 

China’s consumer market maintained a steady recovery in the first half of 2025, with retail sales growth picking up pace compared to the first quarter. Upgraded consumption categories, e-commerce, and services all contributed to an increasingly diversified consumption landscape, though household spending remained cautious amid structural headwinds. 

In the first half of the year, total retail sales of consumer goods reached RMB 24.55 trillion (US$3.34 trillion), rising 5.0 percent year-on-year, an acceleration of 0.4 percentage points from the first quarter. 

By region: 

• Urban retail sales reached RMB 21.31 trillion (US$2.90 trillion), up 5.0 percent year-on-year; 

• Rural retail sales reached RMB 3.24 trillion (US$441.1 billion), up 4.9 percent. 

By consumption type: 

• Retail sales of goods rose to RMB 21.80 trillion (US$2.97 trillion), up 5.1 percent; 

• Catering revenue reached RMB 2.75 trillion (US$375 billion), up 4.3 percent. 

Upgraded and essential consumption categories saw significant growth, especially among enterprises above the designated size. Grain, oil, and food products increased by 12.3 percent year-on-year, while sports and recreational goods surged 22.2 percent, and gold, silver, and jewelry rose 11.3 percent. The government’s consumer goods trade-in policy also helped drive spending in key areas, with household appliances and audio-visual equipment up 30.7 percent, cultural and office supplies rising 25.4 percent, communication equipment growing 24.1 percent, and furniture increasing 22.9 percent.

Online consumption remained a powerful driver of retail growth. In the first half of the year, total online retail sales reached RMB 7.43 trillion (US$1.01 trillion), up 8.5 percent year-on-year. Of this, online sales of physical goodsrose to RMB 6.12 trillion (US$834.3 billion), up 6.0 percent, accounting for 24.9 percent of total retail sales.

In June alone, retail sales of consumer goods increased 4.8 percent year-on-year, though they dipped 0.16 percent month-on-month. Meanwhile, retail sales of services grew by 5.3 percent year-on-year in the first half of 2025, 0.3 percentage points faster than in the first quarter, underlining improved demand for travel, dining, entertainment, and other experience-based consumption. 

Fixed asset investment 

In the first half of 2025, China’s fixed asset investment (FAI) grew 2.8 percent to RMB 24.87 trillion (US$3.38 trillion). Excluding real estate, investment rose 6.6 percent, led by infrastructure (up 4.6 percent) and manufacturing (up 7.5 percent). Real estate investment fell sharply by 11.2 percent.

Secondary industry investment surged 10.2 percent, primary rose 6.5 percent, while tertiary dropped 1.1 percent. Private investment slipped 0.6 percent overall but grew 5.1 percent excluding real estate.

High-tech sectors saw strong gains, with information services up 37.4 percent and aerospace manufacturing rising 26.3 percent. The real estate market remained weak, with commercial building sales down 5.5 percent. Total FAI fell slightly by 0.12 percent in June.

China’s H1 2025 trade: Robust June recovery, ASEAN and Africa lead growth 

China’s foreign trade displayed unexpected resilience in the first half of 2025, supported by a notable rebound in June and strong performance across emerging markets. Data released by the General Administration of Customs (GAC) on July 15 highlights how diversified export strategies and key market shifts have helped stabilize trade momentum, even amid US tariff shocks and weakening global demand. 

Strong June trade performance 

June marked a turning point in China’s trade trajectory, with both exports and imports posting positive year-on-year growth. 

• Exports rose 5.8 percent year-on-year, accelerating from May’s 4.8 percent;

• Imports edged up 1.1 percent year-on-year, reversing three consecutive months of decline; and

• The monthly trade surplus hit US$114.8 billion, up 16 percent year-on-year—the highest on record for June. 

This trade performance significantly contributed to China’s Q2 surplus, which totaled US$314.2 billion, a 21.5 percent increase over the previous year. Preliminary estimates suggest net exports added over 1.3 percentage points to Q2 GDP growth, buffering the economy against sluggish domestic demand. 

Stable growth, shifting partners 

For the January–June period, China’s total goods trade value in RMB terms increased 2.9 percent year-on-year to RMB 21.79 trillion. Specifically: 

• Exports totaled RMB 13 trillion, up 7.2 percent year-on-year; 

• Imports fell 2.7 percent to RMB 8.79 trillion, though the June rebound signaled a potential recovery ahead. 

Despite facing mounting external pressures, officials emphasized that the quality and structure of trade improved, underpinned by a stronger role for private enterprises. These accounted for 57.3 percent of all trade in H1 2025, with imports and exports up 7.3 percent year-on-year. 

Notably, foreign-invested enterprises also extended their growth streak to a fifth consecutive quarter, recording a 2.4 percent increase in total trade. The number of active foreign-funded firms reached 75,000, the highest since 2021. 

The US gap and ASEAN’s rise 

While exports to the US dropped 10.7 percent year-on-year in H1 2025 (a US$25.7 billion decline), China’s trade with ASEAN, the EU, and Africa expanded sharply, effectively absorbing the shortfall. 

• ASEAN exports surged 13 percent (+US$37.1 billion); 

• EU exports rose 6.9 percent (+US$16.3 billion); 

• African exports jumped 21.4 percent (+US$18.2 billion). 

These trends intensified in June: 

• Exports to ASEAN rose 16.8 percent year-on-year; 

• Exports to Africa surged 31.8 percent year-on-year; 

• Exports to the EU increased 7.6 percent year-on-year, although this marked the slowest pace in four months—possibly indicating early signs of trade friction; 

• Exports to the US fell 16.1 percent year-on-year, a notable improvement from May’s 31.5 percent drop, bolstered by a 32.1 percent rebound month-on-month after a temporary tariff truce. 

Sector highlights: Rare earths and industrial goods 

Several product categories delivered outsized gains in June: 

• Rare earth exports soared 60.3 percent year-on-year, reaching a record high as buyers stockpiled ahead of the August tariff deadline; 

• Steel exports climbed over 10 percent, defying protectionist measures from the US, EU, Vietnam, and India; and 

• Exports of integrated circuits, automobiles, and ships increased by 25.5 percent, 27.4 percent, and 11.9 percent, respectively. 

Meanwhile, imports of soybean products (+10.4 percent) and crude oil (+7.4 percent) also rose, reflecting stronger commodity demand and potential restocking. 

Strategic implications and outlook for China’s trade  

Related Reading

China’s ability to redirect exports toward ASEAN, Africa, and Belt and Road Initiative (BRI) partners underscores a growing diversification strategy in the face of geopolitical volatility. Trade with BRI economies totaled RMB 11.29 trillion in H1 2025, up 4.7 percent year-on-year, accounting for over half (51.8 percent) of China’s total trade. However, economists caution that export momentum may soften in the second half of the year as frontloaded shipments taper and US trade policy uncertainty persists.

The brief détente reached in London in June, with China resuming rare earth exports and the US easing some tech curbs, is seen as fragile, with enforcement challenges on both sides. 

President Trump’s threat of 40 percent tariffs on transshipments through Vietnam and revived visa and tech restrictions may further complicate China’s export strategies. Notably, China’s exports to Vietnam soared 23.8 percent in June, reinforcing speculation about rerouting tactics amid the tariff war. 

Foreign direct investment trends 

Foreign direct investment (FDI) into China remained structurally resilient through the first part of 2025, even as headline inflows moderated. While full H1 data is not yet available, figures from the January to May period offer a solid indicator of investor sentiment and directional trends. 

In the first five months of the year, 24,018 new foreign-invested enterprises were established, marking a 10.4 percent year-on-year increase. However, actual utilized FDI reached RMB 358.2 billion (US$49.93 billion), down 13.2 percent from the same period last year. This divergence points to a shift in foreign investor priorities toward long-term structural positioning, rather than short-term capital deployment. 

The services sector remained the dominant magnet for foreign capital, attracting RMB 259.6 billion (US$36.19 billion), or more than 72 percent of total FDI. High-tech industries saw continued inflows, with standout growth in: 

• E-commerce services (+146 percent); 

• Aerospace equipment manufacturing (+74.9 percent); and 

• Chemical pharmaceuticals (+59.2 percent). 

Geopolitically, China remained an attractive destination for investors across both developed and emerging economies. Inflows from ASEAN rose by 20.5 percent, while investments from Japan and the UK surged by 70.2 percent and 60.9 percent, respectively. South Korea and Germany also posted modest gains. 

While full H1 FDI figures are pending, the January-May data reflects ongoing sectoral rebalancing and policy-driven realignment in China’s investment landscape. 

How to read China’s economic data in H1 2025? 

Related Reading

China’s first-half economic data paints a picture of solid headline growth, but one that is not without its underlying tensions. The country’s 5.3 percent year-on-year GDP growth offers reassurance that the government is on track to meet its full-year target of “around 5 percent.” Yet, much of this expansion has been powered by industrial output and external demand, rather than the broad-based domestic recovery policymakers have been hoping to cultivate. 

Consumption, while improving modestly, has not rebounded with the same strength seen in production and exports. Retail sales rose 5.0 percent year-on-year in H1, slightly faster than in Q1, but signs of consumer caution persist, particularly in big-ticket and discretionary spending. Real estate, traditionally a pillar of the economy and household wealth, continues to weigh heavily on sentiment. With property investment down 11.2 percent and sales of new commercial housing shrinking, the drag from the sector is far from over. 

Meanwhile, private investment — a bellwether of market confidence — fell 0.6 percent in H1, and foreign direct investment (FDI) inflows have been tepid. According to the Ministry of Commerce, actualized FDI in China fell 28.2 percent year-on-year in the first five months of 2025, underscoring lingering concerns among global investors about policy predictability, weak demand, and geopolitical risk. 

Nevertheless, the manufacturing upgrade and tech transition story remains a bright spot. Investment in high-tech manufacturing, especially in areas like aerospace, semiconductors, and information services, showed strong double-digit growth. This suggests that industrial policy support is yielding results, and could act as a future growth lever — if it is paired with stronger domestic consumption and sustained business confidence. 

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Looking ahead, the Chinese government may find itself walking a fine line between maintaining stability and delivering stimulus. Authorities have so far refrained from launching large-scale fiscal or monetary easing, opting instead for targeted measures — such as consumer trade-in subsidies and relaxed property purchase restrictions — to address pockets of weakness. But with youth unemployment remaining elevated, deflationary pressures still lingering in parts of the economy, and global demand facing uncertainty, more coordinated policy support may be needed to sustain momentum in the second half. 

In sum, while China’s economic engine remains on track, its forward motion continues to be uneven. The challenge for the remainder of 2025 will be to broaden the base of recovery, restoring confidence across households, private firms, and foreign investors alike — and ensuring that growth is not just faster, but also more balanced and resilient.