China mostly unscathed by turbulent 6 months, but 2025 still an uphill climb

While China’s economy has shown considerable resilience through a turbulent first half of 2025 – navigating the dramatic twists and turns of US trade policy while maintaining steady growth – experts warn Beijing’s challenges are far from over.

Although many believe the country can still hit its annual goal of “around 5 per cent” for gross domestic product growth, more pressure points are expected to emerge in the latter half of the year.

After the bilateral trade war saw a temporary de-escalation following separate rounds of talks in Geneva and London, ratings agency Fitch raised its full-year forecast for China’s economy from 3.9 per cent to 4.2 per cent, even without the details of the framework to which the two countries had agreed. Other institutions remain more cautious, with Barclays holding to its below-consensus projection of 4 per cent.

While forecasts vary, financial institutions broadly agree on the challenges ahead – a downturn in exports, persistent sluggishness in the property sector, weak domestic demand and inefficiencies in the labour market.

Although the decline in China’s shipments to the US has been partially offset by heightened trade with a more diversified set of partners, Barclays forecast that export growth will slow to zero in the second half of the year, owing to a payback effect from a front-loading of orders in the first half and a projected slowdown in US consumer spending.

China Galaxy Securities was less optimistic, predicting that exports in the next six months will contract, with an ultimate annual growth rate of around 1.5 per cent.

South China Morning Post