China’s economy grew at a steady pace in the spring, according to official figures, bolstered by domestic investment in factories and big projects like high-speed rail lines and a continued flood of exports throughout the world.
In the second quarter of the year, from April through June, China’s economy grew 1.1 percent over the previous three months, the National Bureau of Statistics announced on Tuesday. If that pace continues, the economy will expand at an annual rate of about 4.1 percent — only slightly slower than the growth in the first three months of this year.
The report on China’s gross domestic product, or G.D.P., shows how the country’s manufacturing-focused economy has been roiled by President Trump’s steep tariffs, which briefly reached 145 percent in late April and early May. Separate trade data, including a report released Monday, shows that China’s exports to the United States have slumped. But its exports to other countries have jumped, particularly goods sent to Southeast Asia — many of which are re-exported to the United States — and to Europe.
Takeaways: What the Latest Numbers Show
In the first three months of the year, the Chinese economy got a boost when many overseas buyers accelerated orders in anticipation of tariffs. The performance in the second quarter was better than many analysts had expected a few months ago.
Output has been strong enough that some analysts have begun raising their forecasts for the entire year. One research firm, Oxford Economics, last week raised its prediction for 2025 to 4.7 percent from its previous estimate of 4.3 percent.
A major factor in China’s growth has been an extensive program to encourage spending that began last year.
Working through its national government and provincial officials, China has provided subsidies for households to buy electric cars, air-conditioners and other manufactured goods, especially to upgrade to more energy-efficient models. Another aim was to help the country’s factories, many of which are losing money because of overcapacity and price wars. The program has been so popular that some city governments are running low on money to support it.
China’s economy looked particularly good during the second quarter by Beijing’s preferred measure, growing 5.2 percent compared to the same period a year earlier. The quarter benefited from a lower base of comparison because the Chinese consumer subsidy program was only getting started in the spring of 2024, when growth was dismal.
Many analysts question the reliability of China’s growth statistics, which have long been cited by the government as a main gauge of its policies. Meeting the official target for G.D.P. is seen as a national priority. The government’s target this year is for output to be “around 5 percent” higher than last year.
China’s Difficult Balance: Exports and Consumption
The Chinese economy faces two closely related problems: lackluster spending and a glut of goods.
The result has been a steady erosion in prices. Apartments, electric cars and many other big-ticket purchases are all becoming less costly.
“What do people say about buying an apartment now? They just want it to be cheap,” said Ma Yanghua, a real estate agent in Wuhan. “When buying things, everyone wants to get them as cheaply as possible; the cheaper, the better.”
A broad fall in prices, known as deflation, eats into company profits and can put downward pressure on wages. It becomes harder for households and businesses to earn enough money to repay their debts.
As part of its response to the problem, China has reduced interest rates sharply. Rates on Chinese bonds are the lowest in 11 years. That has made it easier for real estate developers, manufacturers and other businesses to borrow money and invest.
The real estate sector nonetheless remains in serious trouble. After stabilizing last autumn and winter, housing prices are falling again.
Economists have recommended that the government put more money in people’s pockets so they can buy more goods. But provincial agencies in particular are struggling to afford the existing consumer subsidy programs. Another factor working against the programs meant to juice spending is the central government’s emphasis on frugality.
That was illustrated last week with the announcement of the annual increase in pensions, China’s version of Social Security. Pensions are already tiny — as little as $20 a month for rural residents — and will be going up by an average of only 2 percent this year.
Li You contributed research.
Keith Bradsher is the Beijing bureau chief for The Times. He previously served as bureau chief in Shanghai, Hong Kong and Detroit and as a Washington correspondent. He has lived and reported in mainland China through the pandemic.
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