SCIO briefing on China's economic performance in May 2025

National Business Daily:

We have observed that in May, the impact of international factors and new drivers of domestic consumption continued to grow and interact. Based on the data for May, what trends or characteristics stood out in China's economic performance? How would you evaluate it? Thank you.

Fu Linghui:

In May, the international environment changed rapidly. Facing a complex situation, under the strong leadership of the CPC Central Committee, all regions and departments accelerated the implementation of more proactive and effective macroeconomic policies. They focused on stabilizing employment, enterprises, the market and expectations; worked to expand domestic demand; promoted the integration of technological and industrial innovation; strengthened the domestic economic cycle; and effectively responded to external changes. As a result, economic performance remained generally stable, some indicators continued to improve, new drivers of growth grew stronger, and the momentum of high-quality development persisted, demonstrating the strong resilience and vitality of China's economy. Mainly, the following characteristics stood out:

First, growth remained stable. With the support of various policies, enterprises actively adjusted and responded, leading to rapid growth in industrial production. In May, the value added of industrial enterprises above designated size increased 5.8% year on year, maintaining rapid growth. China has a complete industrial system, and key sectors such as equipment manufacturing have seen accelerated growth while advancing industrial upgrading. This has provided strong support for stable industrial expansion. In May, the value added of equipment manufacturers above designated size increased 9%, accounting for 54.3% of the growth of industrial production. The expansion of domestic consumption and increased holiday travel also drove faster growth in the service industry. The service production index rose 6.2% year on year in May, 0.2 percentage point faster than the previous month. Stable growth in production and supply provided strong support for meeting market demand and boosting economic growth.

Second, economic performance remained stable. To determine whether the economy is operating stably, it is important to examine changes in production and demand indicators, as well as employment and price trends. As for production and demand indicators, in May, the growth rates of key measures — such as the value added of industrial enterprises above designated size, the service production index, and total retail sales of consumer goods — remained generally stable, indicating overall stability in production and demand. From the perspective of employment, the national surveyed urban unemployment rate in May was 5%, down 0.1 percentage point from the previous month. From a price perspective, due to international factors and lower prices for some food items, the CPI in May declined slightly year on year, but the rate of decline was unchanged from the previous month. The increase in core CPI, which excludes food and energy, was higher than the previous month, indicating that market supply and demand remained generally balanced. These figures show that overall economic performance in May was steady.

Third, continued improvement was seen. While overall economic performance remained stable, macroeconomic policies continued to take effect, domestic demand expanded, production and supply increased, and some indicators showed further improvement. Boosted by consumer goods trade-ins and online sales promotions, sales growth has accelerated. In May, total retail sales of consumer goods increased 6.4% year on year, 1.3 percentage points faster than the previous month. In the first five months, retail sales of services increased 5.2%, 0.1 percentage point faster than in the first four months. Accelerated consumption growth, especially increased spending on services, boosted related service industries. In May, the production index for wholesale and retail rose 1.6 percentage points, while the index for accommodation and catering increased 0.9 percentage point from the previous month.

Fourth, multiple growth drivers emerged. China is at a critical stage of industrial upgrading and development. As innovation plays an increasingly prominent role, new drivers of growth, such as high-end manufacturing, the digital economy and new energy industries, continue to strengthen. This has supported industrial transformation and stable economic performance. The statistical data for May also reflect these trends. The value added of high-tech manufacturers above designated size increased 8.6% year on year, while the value added of digital product manufacturers increased 9.1%, both significantly outpacing the overall growth rate of enterprises above designated size. The output of NEVs and solar cells jumped 31.7% and 27.8%, respectively, maintaining rapid growth.

Fifth, the economy showed great resilience. Against the backdrop of a complex and severe external environment, China's economy continued to show resilience and potential. This was evident not only in stable economic performance, but also in the continuous growth of foreign trade despite external pressures. In May, China's total imports and exports of goods increased 2.7% year on year, with exports up 6.3%. Despite sluggish global economic growth and a decline in trade with the United States, China successfully diversified its foreign trade. Imports and exports with ASEAN countries and Belt and Road partner nations continued to grow. Although exports of some labor-intensive products have slowed, exports of electromechanical products with higher technical content have expanded. These factors have boosted trade growth and reflect the advantages of China's large economic scale, complete industrial system and strong overall competitiveness.

Overall, in the face of changes in the external environment, the macro policies have worked together, and all sides have actively responded. In May, the national economy operated steadily overall, continued its trend of high-quality development, and showed comparatively strong resilience and vitality. In the next stage, there are many uncertain factors in the international environment, long-standing problems accumulated in the domestic economy are still emerging, and the foundation for economic recovery and improvement still needs to be consolidated. We must thoroughly implement the decisions and deployments of the Party Central Committee and the State Council, implement more proactive and promising macro policies, focus on strengthening the domestic economic flows and innovation-driven development, solidly promote high-quality development and foster the sustained and healthy development of the economy. Thank you.