Stability was reflected in the consistent performance of key macroeconomic indicators. In H1, China's GDP reached 66.05 trillion yuan ($9 trillion), surging by 5.3 percent year on year. Growth came in at 5.4 percent in the first quarter (Q1) and 5.2 percent in the second (Q2), resulting in a 0.3-percentage-point increase over both the same period and the full year of 2024, when GDP growth was 5 percent. These figures suggest that while growth has remained steady, it has also shown a modest upward trend.

Economic transformation and high-quality development made new progress.

Innovation prompted the rapid rise of new industries, technologies and business models. In 2024, the combined value added by these emerging sectors made up about 18 percent of GDP. That momentum carried into this year, with hi-tech industries growing by 9.5 percent in the first half.

The domestic market became more active. In response to external pressures, the Central Government has introduced several policies to boost domestic demand, support production and facilitate circulation.

"Overall, more proactive and targeted macroeconomic policies have produced tangible results in H1, with the economy continuing its steady recovery and showing strong resilience and vitality," Sheng said. "At the same time, challenges remain. External uncertainties persist, domestic demand is still insufficient and the foundation for sustained recovery needs further reinforcement."

Structural upgrade

In H1, the three driving forces of the economy—final consumption expenditure, gross capital formation and net exports of goods and services—contributed 52 percent, 16.8 percent and 31.2 percent to economic growth, respectively.

"Domestic demand, particularly consumption, has emerged as the primary engine driving GDP growth," Sheng said.

Retail sales of consumer goods reached more than 24.54 trillion yuan ($3 trillion), marking a 5-percent increase year on year. In Q2, growth accelerated to 5.4 percent, up 0.8 percentage points from Q1, suggesting that China's consumer engine is gaining speed, though not yet at full throttle.

"The consumer goods trade-in program (which incentivizes households to replace old appliances, electronics and vehicles with newer, energy-efficient models through subsidies and discounts—Ed.) has had a major and immediate impact on spurring consumption," Guo Liyan, deputy head of the Economic Research Institute of the National Development and Reform Commission, said at the Guoshi Forum on the Chinese economy, hosted by China News Service in Beijing on July 15.

Key product categories under the program, such as household appliances, cultural and office supplies, communication devices and furniture, posted strong double-digit growth, she said.

According to the Ministry of Commerce, the trade-in program generated 1.1 trillion yuan ($153 billion) in sales in the first five months of 2025.

Sheng highlighted several defining trends that are reshaping the way the nation spends. He said H1 saw clear momentum in service-related spending. Service consumption outpaced that of goods, with service retail sales rising 5.3 percent year on year, ahead of the 5.1-percent growth in goods retail.

The holiday economy played a pivotal role in this, he said. Travel and spending surged during the Spring Festival (January 29-February 12), Labor Day (May 1-5) and Dragon Boat Festival (May 31-June 2) holidays, with the number of holiday travelers reaching record highs.

Consumer tastes are also shifting toward upgraded and lifestyle-focused purchases, Sheng added. Sales of sports gear jumped 22.2 percent compared to the same period last year. Jewelry sales, including gold and silver, climbed by 11.3 percent. 

At the same time, new consumption trends are gaining ground. Green spending is growing, visa-free entry and transit policies are boosting inbound tourist shopping, and purchases made not out of necessity but to satisfy personal pleasure are on the rise, he said.

Guo cited several examples—events like the "Suchao" sports league, aka the Jiangsu Soccer City League, have driven cross-city cultural and sports consumption, smaller cities are developing new cultural tourism experiences, and major urban centers are using technologies like AI to enhance everyday services. These efforts are diversifying the service supply, making it more layered and better tailored to the needs of different age groups, she said.

"These are the new growth points we've identified in the consumer market as we work to improve people's wellbeing and better meet their aspiration for a higher standard of living," she said.

The National Development and Reform Commission and the Ministry of Finance have pledged additional funding to sustain the trade-in program throughout the year.

Guo emphasized that boosting consumption in the second half (H2) of the year depends on strengthening supporting measures. "Having both the money and the time to spend is essential," she said, calling for more flexible and paid leave policies, along with efforts to stabilize employment and raise incomes. With spending power and willingness in place, the real focus lies on the supply side, specifically in upgrading service offerings.

An anchor of stability

China's total import and export volume reached 21.79 trillion yuan ($3 trillion) in H1, a 2.9-percent increase year on year and the highest level ever recorded for the period. Notably, exports alone exceeded 13 trillion yuan ($2 trillion) for the first time in a first-half cycle, a strong 7.2-percent growth.

"The data underscore the resilience of China's foreign trade," Zhou Mi, a senior research fellow at the Chinese Academy of International Trade and Economic Cooperation, said at the forum.

"What matters is continuity," he added, pointing out that China's foreign trade has expanded for seven consecutive quarters, nearly two full years.

Zhou emphasized that China's export growth isn't just about competitive pricing, but a combination of price advantage, supply chain stability and the resilience of supply. "China is becoming a key stabilizing force in the global trade system," he said.

Despite an increasingly complex external environment since early April, when the U.S. Government announced new tariffs on a wide range of imported goods from all over the world, China's imports and exports rose by 4.5 percent in Q2, accelerating by 3.2 percentage points compared to Q1.

Zhou said Q2 would be expected to remain stable under normal circumstances, but several factors drove this stronger-than-expected performance. Global demand is showing signs of recovery, he said. As economies rebound, there's a growing demand for high-quality products, an area where China has proven its strength.

The U.S. tariff hikes disrupted trade expectations, prompting many companies to temporarily halt shipments from China in April. After a 90-day tariff pause was agreed upon between China and the U.S. in May, businesses, especially U.S. wholesalers and retailers, quickly resumed imports, even stocking up in anticipation of future tariff risks, he explained.

He said the trade uncertainty has pushed many countries to seek alternative markets and more reliable supply chains. Recent reports from international organizations show that regional trade ties are strengthening worldwide.

China has steadily lowered import duties in recent years, especially for the least developed countries, many of which now enjoy zero tariffs on 100 percent of eligible goods.

In H1, China's trade expanded with over 190 countries and regions. The number of its partners with over 50 billion yuan ($7 billion) in bilateral trade rose to 61, five more than the same period last year. Trade with Belt and Road partner countries grew by 4.7 percent. The China-proposed Belt and Road Initiative aims to boost connectivity along and beyond the ancient Silk Road routes.

Trade and investment are deeply intertwined. Rising trade often leads to expanded outbound investment as firms scale operations and optimize global networks, Zhou said, adding that in H2, this dynamic is expected to strengthen.

Quality homes

In H1, China's fixed assets investment reached 24.87 trillion yuan ($3 trillion), up 2.8 percent year on year. Stripping out real estate, the growth rate stood at 6.6 percent.

Sheng said as China enters a new stage of development, investment in traditional industries has largely plateaued. Real estate investment, for example, continued to decline in H1. These structural adjustments are adding short-term pressure to overall investment growth.

"Still, the investment structure is showing clear signs of improvement," he said. In the first six months, manufacturing investment rose by 7.5 percent, accounting for 25.2 percent of total fixed assets investment. Investment in hi-tech services surged by 8.6 percent, well above the average.

Meanwhile, local governments introduced measures to curb decline and stabilize the real estate market.

Market activity showed signs of improvement, with the decline in commercial housing sales narrowing year on year. Price drops also eased overall, and some cities even saw increases. Funding sources for the real estate sector have also improved, Sheng said.

"High-quality housing has become a new growth driver in China's real estate sector," Wu Jing, Dean of the School of Civil Engineering and Water Conservancy at Tsinghua University and Director of the school's Hang Lung Center for Real Estate, told the forum.

The new National Residential Building Standards, effective since May, have raised quality benchmarks across the country. Cities are also releasing their own guidelines to push up housing standards, fueling a shift in new supply toward high-end homes.

Demand for better housing now outpaces that for first homes in many cities. From January to May, roughly 40 percent of new home sales in China's 30 major cities were for units between 90 and 120 square meters, with larger homes (120-144 square meters) accounting for 30 percent—a record share, according to real estate research institution China Index Academy.

High-quality housing projects are playing a leading role in stabilizing the broader real estate market, according to Wu.

Positive expectations

"China's 5.3-percent GDP growth in H1 reflects not just economic resilience, but also the strong support from sustained fiscal and monetary policies," Ming Ming, chief economist at CITIC Securities, China's largest securities firm by assets, said at the forum.

He said the fiscal policy has become noticeably more proactive. For instance, 1.3 trillion yuan ($181 billion) of ultra-long-term special government bonds—those with a term of more than 10 years—was issued, 300 billion yuan ($42 billion) more than last year. Support for the consumer goods trade-in program doubled from 150 billion ($21 billion) to 300 billion yuan ($42 billion).

Ming expects more pro-growth policy measures in H2. However, given the strong macroeconomic performance in H1 and the substantial use of existing policy resources, any additional stimulus will likely come from innovative policy tools, he said.

These tools, he believes, will focus on support for the service sector and consumer spending. BR

(Print Edition: Mid-Year Snapshot)

Copyedited by Elsbeth van Paridon 

Comments to zhangshsh@cicgamericas.com 

China's Economic Performance in H1 

(All growth rates are y.o.y.) 

GDP 

• +5.3% 

Growth Drivers 

• Final consumption: 52% of GDP growth 

• Gross capital formation: 16.8% 

• Net exports: 31.2% 

Consumption & Investment 

• Retail sales of consumer goods: +5% 

• Fixed assets investment: +2.8% 

Trade 

• Total: +2.9% 

• Exports: +7.2% 

Industrial Output 

• Overall: +6.4% 

• Hi-tech manufacturing: +9.5% 

Employment 

• Urban surveyed unemployment rate: 5.2% on average 

Income 

• Per-capita disposable income: 21,840 yuan, +5.3%