China's GDP expands 5.3% year on year in H1 amid challenges

This photo shows a view of an intelligent spinnery in Zaozhuang City, east China's Shandong Province, April 15, 2025. [Photo/Xinhua]

Despite rising challenges and external uncertainties, China achieved steady economic growth in the first half of the year (H1) and is actively taking steps to maintain stability and sustain growth momentum in the months ahead.

China's gross domestic product (GDP) grew 5.3 percent year on year in the first half of 2025, data from the National Bureau of Statistics (NBS) showed Tuesday. In the second quarter, the country's GDP expanded 5.2 percent year on year.

"The economy has made steady progress despite pressures, with significant economic indicators performing better than expected," said Sheng Laiyun, deputy head of the bureau, at a press conference on Tuesday.

In the first six months of this year, China's industrial output increased by 6.4 percent compared to the same period last year, with equipment manufacturing and high-tech manufacturing sectors posting rapid growth.

The consumer market maintained an upward trend during the period, with retail sales of consumer goods expanding 5 percent year on year in the first half. The pace is 0.4 percentage points faster than the growth recorded in the first quarter.

Fixed-asset investment continued to grow during the first six months, marking a 2.8 percent year-on-year increase. In particular, investment in the manufacturing sector saw notable growth.

The job market remained generally stable, with the surveyed urban unemployment rate averaging 5.2 percent in the first half, a 0.1 percentage point decrease from the first quarter.

The country's per capita disposable income reached 21,840 yuan during the January-June period, marking a 5.3 percent year-on-year increase in nominal terms, or 5.4 percent after deducting price factors, according to the NBS.

Commenting on the economic performance in the first half, Sheng described it as "highly valuable," marked by continued progress and a positive trend built on overall stability.

"This is a hard-won achievement, especially given the sharp changes in the international environment and increased external pressures since the second quarter," Sheng added.

Demand-driven growth 

In response to external challenges, China has made boosting domestic demand a key priority, implementing a range of measures to stimulate consumption in the first half of 2025.

The NBS data released Tuesday showed that domestic demand contributed 68.8 percent to GDP growth during the period, with final consumption expenditure accounting for 52 percent, making it the main driver of growth.

One of the key measures to spur consumption is the consumer goods trade-in program, which expanded to cover more product categories in the first half of this year and played a vital role in boosting retail sales.

In the first five months of this year, the trade-in program generated 1.1 trillion yuan in sales, data from the Ministry of Commerce showed.

To ensure steady and balanced progress of the trade-in program, the National Development and Reform Commission and the Ministry of Finance are scheduled to allocate additional funding in July and October, respectively.

In addition to a more proactive fiscal policy, China has adopted a moderately loose monetary policy since the beginning of the year, aiming to shield its economy from external challenges and support sustained recovery. Measures include cutting the reserve requirement ratio, lowering interest rates on structural monetary policy tools, and expanding the quota for relending in support of scientific and technological innovation and transformation, according to the People's Bank of China, the country's central bank.

New momentum gathers pace 

During the first half of 2025, China's high-tech sectors experienced rapid growth, with value-added industrial output in high-tech manufacturing rising by 9.5 percent. This growth rate was 3.1 percentage points higher than that of overall industrial output during the same period.

In 2024, the added value of the country's new industries, new business formats and new business models accounted for nearly 18 percent of the total GDP, indicating that new growth momentum is accumulating, Sheng said.

According to Sheng, the "accumulation of new growth momentum" was a key feature of China's economic development in the first six months. He noted that regions across the country are developing new quality productive forces suited to their local conditions, while the integration of technological and industrial innovation is accelerating.

To further advance tech-driven growth in the next stages, a recent executive meeting held by the State Council, or China's cabinet, called for efforts to accelerate breakthroughs in core technologies, translate technological achievements into productivity, and consolidate the role of enterprises in pioneering innovation.

Earlier this month, the Ministry of Industry and Information Technology released a work plan aimed at integrating information technology with China's industrialization. Notably, the plan outlines the launch of pilot programs in cities across the country to accelerate the adoption of advanced technologies in manufacturing, as well as to support the digital transformation of small and medium-sized enterprises.

Wen Bin, chief economist at China Minsheng Bank, said that China will continue to pursue high-level self-reliance and strength in science and technology. He also highlighted the recent launch of a science and technology board for its bond market, along with a risk-sharing instrument for bonds related to sci-tech innovation, noting that efforts are underway to further strengthen policy support for tech-driven development.

Positive outlook ahead 

Speaking of the second half of the year, Sheng said that despite various external uncertainties and challenges related to domestic structural adjustments, the Chinese economy has a solid foundation to sustain steady growth.

He noted that the steady economic growth in the first half has laid solid groundwork for achieving the annual growth target. Moreover, the combined effectiveness of the country's more proactive macro policies will help ensure the stable functioning of the economy.

Relevant authorities are speeding up the introduction of policies for the second half of the year, which will continue to play a key role in stabilizing the economy, Sheng said. He added that China is diversifying its policy toolkit and will introduce measures promptly in response to market changes.

Given the steady trajectory of China's economy, several global financial institutions, such as Goldman Sachs, Deutsche Bank and Morgan Stanley, have recently raised their forecasts for the country's economic growth rate in 2025.

Commenting on the future trajectory of the economy, Xiong Yi, chief China economist at Deutsche Bank, emphasized the strong potential for China's services consumption to expand in the next few years. "China has likely reached a development stage where its population will have increasing demand for higher-quality services. These include elderly care, healthcare, education and tourism," Xiong said.

Xiong added that China's innovative capacity, the competitiveness of its manufacturing supply chain, and improving domestic demand and business sentiment have increasingly attracted international investors.

Looking ahead, Sheng noted that some challenges remain for the economy. The external environment continues to be complex and unpredictable, while internal structural issues have yet to be fundamentally resolved. He also emphasized that the foundation of China's economic performance still requires further strengthening.

In the next phase, China will continue to strengthen domestic circulation and counter external uncertainties by pursuing high-quality economic development, thereby ensuring stable and sustained growth, Sheng said.