In 2002, an electronics shop on a dusty street in Hangzhou stood as a quiet witness to China’s accelerating transformation. A few years earlier, most customers arrived by bicycle, looking for cassette players or basic radios. Sales were steady, predictable – rooted in a rhythm that hadn’t changed much in decades. But the city around the shop was shifting. China had recently joined the World Trade Organization, and economic growth was surging above 9 percent. Factories were humming, new roads were being paved, and construction cranes began crowding the skyline. Shopkeepers didn’t need to read economic reports to understand what was happening. It was visible in the changing face of the street, in the conversations with customers, and in the pace of the city itself. In that moment, China’s GDP growth wasn’t an abstract number. It was the quiet, daily transformation of habits, hopes, and the tools of everyday life.
A quarter of a century later, the phase of explosive expansion has ended, replaced by a period of recalibration. Yet, China’s economy managed to expand by 5.3 percent year-on-year in the first half of 2025, exceeding expectations and putting the government on track to meet its full-year growth target of around 5 percent. This headline figure was supported by resilient industrial production, robust external trade, and targeted policy support. Still, persistent weaknesses in domestic demand, private investment, and real estate continue to weigh on the broader recovery narrative. Second-quarter GDP rose by 5.2 percent year-on-year and 1.1 percent quarter-on-quarter, reflecting modest momentum amid a volatile global backdrop and renewed geopolitical tensions.
The industrial sector remained a key engine of growth, with value-added industrial output up 6.4 percent year-on-year, driven primarily by manufacturing, which expanded by 7.0 percent. High-tech and equipment manufacturing outpaced the broader sector, growing 9.5 percent and 10.2 percent respectively, as industrial upgrading and supply chain localization gathered pace. However, profitability remained under pressure, with total industrial profits down 1.1 percent in the first five months. Sentiment remains cautious, as the official Manufacturing PMI edged up to 49.7 – just shy of the expansion line – indicating continued hesitation across the sector. Still, June industrial output rose 6.8 percent year-on-year.
The services sector also posted stable growth, with value-added output rising 5.5 percent year-on-year, slightly above first quarter’s pace. The Services Business Activity Index rose to 50.1 in June, with the forwardlooking expectation index at 56.0, suggesting a moderately improving outlook. Retail sales rose 5.0 percent year-on-year in the first half of the year, up from 4.6 percent in the first quarter. Urban consumption rose by 5.0 percent, closely matched by a 4.9 percent increase in rural areas. Online retail was a key driver, reaching RMB 7.43 trillion (+8.5 percent). Government-led trade-in incentives boosted household appliance sales (+30.7 percent), communication equipment (+24.1 percent), and furniture (+22.9 percent). However, there are signs this impulse may have peaked: June retail sales rose 4.8 percent year-on-year but slipped 0.16 percent month-on-month, hinting at renewed caution among consumers.
Excluding real estate, FAI expanded a more robust 6.6 percent, reflecting a shift in capital allocation toward more productive sectors. However, property investment declined sharply by 11.2 percent, continuing to act as a drag on broader momentum. Investment in the secondary industry grew 10.2 percent, while tertiary industry investment edged down by 1.1 percent. High-tech investment remained a bright spot, with information services up 37.4 percent and aerospace manufacturing up 26.3 percent, aligning with Beijing’s long-term industrial policy goals.
Despite external pressures, China’s total trade rose 2.9 percent year-onyear in the first half, reaching RMB 21.79 trillion. Exports climbed 7.2 percent, while imports fell 2.7 percent – though June data pointed to a rebound. The monthly trade surplus hit USD 114.8 billion, a record high for June. While exports to the US fell 10.7 percent, gains to ASEAN (+13 percent), Africa (+21.4 percent), and the EU (+6.9 percent) more than compensated. China’s pivot to Belt and Road and emerging markets has proven vital in absorbing the shock of American tariffs. Trade with Belt and Road partners reached RMB 11.29 trillion, accounting for 51.8 percent of total trade. Net exports contributed more than 1.3 percentage points to the GDP of the second quarter, cushioning the impact of domestic softness.
In the commodities space, China’s iron ore imports reached 105.95 million tonnes in June, rising 8 percent from May and marking the strongest monthly intake so far this year. Despite this rebound, total imports for the first half slipped 3 percent year-on-year to 592.21 million tonnes. Coal imports continued to decline, falling to 33.04 million tonnes in June – the lowest monthly level in over two years – as higher domestic output displaced lower-quality foreign cargoes. Over the January–June period, coal arrivals dropped 11 percent year-on-year to 221.7 million tonnes. Soybean imports climbed to 12.26 million tonnes in June, an increase of just over 10 percent compared to the same month last year, lifting first-half volumes by 1.8 percent to 49.37 million tonnes. Meanwhile, China exported 9.68 million tonnes of steel in June, down 8.5 percent from May, though cumulative exports for the first six months rose 9.2 percent year-on-year to 58.15 million tonnes, according to the China Iron and Steel Association.
In sum, China’s economic data confirms that the economy remains on track to hit its 2025 growth target. But the recovery remains uneven. Industrial output and external trade continue to bear the load, while domestic demand and property remain fragile. Confidence among private enterprises is recovering gradually, but the road to a broad-based recovery likely requires greater policy clarity and more decisive structural reform. Inflation remains muted, and with external risks still elevated, the likelihood of further coordinated stimulus in the second half has increased. For now, however, the policy approach remains measured.
In the spot market, the recent rebound has followed a similarly tempered path. During week 29, the Panamax segment – last week’s outperformer – gave up ground, retreating into negative territory. The rest of the dry bulk complex, however, posted gains, underpinned by seasonal drivers and resilient Atlantic demand.
Data source: Doric