According to the always-dubious data released by the Chinese Communist government, China’s economy grew by 5.2 percent in the second quarter of 2025, which is slower than its 5.4 percent growth in the first quarter, but better than the 5.1 percent growth projected by analysts.
As ever with economic news, various media organizations spun the Q2 report as either good or bad news for China, depending on their political orientation. Reuters headlined the news with “China’s Economy Slows As Consumers Tighten Belts, U.S. Tariff Risks Mount,” while the UK Guardian went with “China’s Economy Beats Expectations In Face of Trump’s Trade War.”
Amusingly, the content of the two articles was virtually identical because the Guardian was simply running a slightly modified version of the Reuters newswire copy.
The phrase “beats expectations” did some very heavy lifting for the Guardian, since the actual growth reported by the Chinese government was only 0.1 percent higher than analyst predictions.
Both versions of the article made a better argument for pessimism by quoting Societe Generale economist Wei Yao, who noted that China’s “strong” growth in the first half of 2025 is “set to sour” in the second half, “as export frontloading fades and the impact of U.S. tariffs becomes more visible.”
“Renewed weakness in house prices and the fading impact of subsidies also cast doubt over the sustainability of the consumption recovery,” Wei added.
The article also quoted some Chinese consumers, very few of whom appear to believe their economy is surging or defying expectations.
“Both our incomes as doctors have decreased, and we still don’t dare buy an apartment. We are cutting back on expenses: commuting by public transport, eating at the hospital cafeteria or cooking at home. My life pressure is still actually quite high,” said 30-year-old doctor Mallory Jiang, whose husband is also a doctor.
The left-wing New York Times (NYT) avoided talking about Wei’s dour predictions for the second half of the year, instead congratulating Beijing for keeping the economy growing at a “steady pace” with plenty of big government spending on “factories and big projects like high-speed rail lines.”
The NYT cited export data to conclude that China is doing just fine in the trade war:
The report on China’s gross domestic product, or G.D.P., shows how the country’s manufacturing-focused economy has endured President Trump’s steep tariffs, which briefly reached 145 percent in late April and early May. Trade data released on Monday showed that China’s exports to the United States began to rebound in June, after the countries reached a tariff truce in mid-May, but remain depressed.
China’s exports to other countries, however, have jumped, particularly goods sent to Southeast Asia — many of which are re-exported to the United States — and to Europe and Africa.
The NYT mentioned the same “frontloading” phenomenon as Wei, noting that China’s economy “got a boost” in the first quarter because “overseas buyers accelerated orders in anticipation of tariffs.”
Unlike the downbeat forecast offered by Reuters, the NYT’s experts were convinced China would keep its exports at comparably high levels throughout the rest of the year, and they did not dwell on how fire-sale pricing and government subsidies for those exports might cut into China’s bottom line.
“Factory investment is booming to meet export demand, even as a glut of capacity has driven prices for manufactured goods down sharply. Rapid construction of factories and high-speed rail lines has more than offset a plunge in real estate development, down 11.2 percent in the first half of this year,” the NYT said.
Most analysts agree that China is still far too dependent upon exports, consumer demand is dangerously low for such a massive economy, and the real-estate time bomb is still ticking.
China has been attempting to goose consumer demand with some very generous stimulus programs, such as offering huge subsidies for the purchase of big-ticket appliances and automobiles.
That kind of “stimulus” does not produce real or sustainable economic growth, as the NYT tacitly conceded by noting that the subsidy programs are ending because they ran out of money to give away. Even Chinese Communist Party economists understand that problem, as they have traditionally been reluctant to approve expensive stimulus programs that conjure an illusion of demand by dumping money in the pockets of lower-end consumers.
The big-ticket item Chinese consumers are not buying is property, despite record-low interest rates. Home prices have fallen by 20 percent over the past four years, and could drop by another ten percent before 2027, according to a Goldman Sachs report released last month.
“The unfolding housing market correction in China represents one of the decade’s most significant economic events,” the report said.
Some analysts have spoken of a mild recovery in the real estate market, but that recovery has only been happening in a few of the biggest, highest-demand cities, like Beijing and Shanghai. China’s other cities, and its vast rural communities, are still grappling with crashing prices and unsold inventory. Residents of those areas may come to resent their government touting brisk sales of high-end luxury apartments in swank neighborhoods as leading indicators of a housing market recovery.
The South China Morning Post (SCMP) reported on Tuesday that a survey of new homes in 70 of China’s major cities fell by 0.3 percent in June, accelerating a trend from May. Even the so-called “first-tier” cities like Beijing experienced a slide in prices; only the great trading hub of Shanghai seemed to be immune.
Newsweek noted in June that China’s real-estate crisis is both a cause, and a symptom, of weak overall consumer demand and trade war anxiety. Nervous consumers do not purchase real estate, especially when prices keep falling, and people who don’t own property tend to be nervous about other big-ticket purchases.
For all the talk of China weathering the trade war by shifting its exports away from the United States, the property sector remains almost a third of the nation’s gross domestic product – and with China’s population declining at a perilous rate, the future of property demand does not look bright.
“We calculate that annual demographic demand in urban China will average only 4.1 million housing units per year in 2025-2030, compared to 9.4 million units per year in the 2010s. It is striking that China’s demographic demand for new urban housing likely halved within a decade,” Goldman Sachs researchers told Newsweek.
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