China’s economy shows resilience but faces mounting pressure

China’s economy slowed less than expected in the second quarter, showing resilience against U.S. tariffs. However, analysts warn that weak domestic demand and rising global trade risks are likely to increase pressure on Beijing to introduce more stimulus measures.

Data released today showed that China’s gross domestic product (GDP) grew by 5.2% year-on-year in the April–June quarter, slowing from 5.4% in the first quarter, but slightly ahead of the 5.1% consensus forecast. On a quarterly basis, GDP grew 1.1%, beating the 0.9% forecast but slightly below the 1.2% growth in the previous quarter.

The world’s second-largest economy has so far avoided a sharp slowdown, thanks in part to policy support and a U.S.-China trade truce, which allowed factories to front-load shipments. Still, the outlook for the second half of the year is dimming as exports lose momentum, prices fall, and consumer confidence remains weak.

Policymakers face a daunting challenge in achieving the annual growth target of around 5%—a goal many analysts see as ambitious in light of persistent deflation and soft domestic demand.

In response, Beijing has ramped up infrastructure spending, consumer subsidies, and monetary easing. In May, the central bank cut interest rates and injected liquidity to help cushion the economy from the impact of U.S. President Donald Trump’s sweeping tariffs.

Investors are now looking ahead to the upcoming Politburo meeting in late July, where fresh stimulus measures may be announced to shape economic policy for the rest of the year. Expectations are rising that the government could increase deficit spending if growth weakens significantly.