Economic growth momentum expected to continue

The Chinese economy expanded 5.3 percent year-on-year in the first half of 2025, official data showed on Tuesday, defying mounting global headwinds and providing a solid footing for achieving the full-year growth target of around 5 percent.

Analysts said they expect the economic growth momentum to continue in the second half of the year, given the government's ample policy room and tools, the steady recovery in domestic demand, and the resilience in exports.

Looking ahead, they said that China's top leadership may sharpen its focus on maintaining economic stability and restoring market confidence, with strong fiscal stimulus and further monetary easing to stimulate domestic demand and cushion against external headwinds.

Data from the National Bureau of Statistics showed that China's GDP increased 5.2 percent year-on-year in the second quarter of this year, cooling from a 5.4 percent growth in the first quarter.

"The Chinese economy posted a solid first half, supported by resilient exports," said Louise Loo, lead economist at British think tank Oxford Economics. "Sequential GDP growth moderated in the second quarter, but still allowed first-half growth to reach 5.3 percent — comfortably above the official 5 percent full-year target."

China's value-added industrial output grew 6.8 percent year-on-year in June, after a 5.8 percent rise in May, while retail sales — a key measurement of consumer spending — rose 4.8 percent year-on-year in June, down from 6.4 percent in May.

Loo said that retail sales growth slowed in June, reflecting weak organic spending momentum following the temporary boost from the "618" shopping festival.

Loo said that fiscal policy is expected to take the lead in supporting growth, as June's robust government bond issuance suggests stimulus is being ramped up. "We anticipate this will include renewed funding for the trade-in program, given its more immediate impact on demand," she added.

According to NBS data, final consumption accounted for 52 percent of China's economic growth in the first half of the year. In the second quarter, final consumption contributed 52.3 percent to economic growth, slightly higher than the figure in the first quarter.

"These figures indicate that domestic demand — particularly consumption — remains the primary driver of GDP growth," Sheng Laiyun, deputy head of the NBS, said on Tuesday at a news conference in Beijing.

NBS data shows retail sales rose 5 percent year-on-year in the first half of 2025, up from 4.6 percent in the first quarter.

"The upward momentum seen in consumption in the first half will likely carry into the second half," Sheng said, noting that new rounds of consumption-boosting stimulus measures, including subsidies, are already being rolled out.

"Authorities are accelerating the rollout of policies for the second half of the year. China's policy toolbox remains ample and it is strengthening policy reserves, with new measures to be introduced as needed in response to market changes," he said.

Given China's robust first-half performance, Ming Ming, chief economist at CITIC Securities, said the second-half policy efforts are likely to focus on innovating policy tools.

"Efforts will likely target key areas in the economy, including supporting property destocking, further developing the service sector and boosting consumption," he said on Tuesday at a forum hosted by China News Service in Beijing.

Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, said that China will likely step up "unconventional" countercyclical adjustments in the second half to cushion external pressures.