China's Q2 GDP Growth Likely Surpasses 5% on Improved Domestic Demand and Trade Support

China's Q2 GDP Growth Likely Surpasses 5% on Improved Domestic Demand and Trade Support

By tredu.com 7/3/2025

Tredu

CPI inflation ChinaChinese economyChina GDP
China's Q2 GDP Growth Likely Surpasses 5% on Improved Domestic Demand and Trade Support

China Q2 GDP Growth Likely Exceeds 5% as Economic Drivers Strengthen

China’s second-quarter GDP is expected to show year-over-year growth of 5.1%, slightly higher than Q1’s 4.7%, according to early forecasts. On a quarterly basis, however, the growth may have dipped to below 1%, reflecting seasonal moderation and structural challenges.

PMI and Domestic Demand Signal Recovery Momentum

The official June PMI survey indicated a month-on-month improvement in demand, supporting industrial and production activity during Q2. This reinforces the view that domestic consumption is gradually stabilizing, though still uneven across sectors.

Trade Activity Aided by Front-Loading, Oil Imports

China’s trade sector likely got a boost from front-loaded exports in anticipation of global shipment delays. On the imports side, rising crude oil prices helped elevate the value of inbound trade, supporting broader economic activity.

Inflation Mixed: CPI Positive, PPI Still in Deflation

Consumer Price Index (CPI) inflation returned to positive territory in June, adding to signs of price normalization. However, Producer Price Index (PPI) deflation likely remained steep, with an estimated -3% year-over-year reading, reflecting persistent weakness in upstream manufacturing and commodities.

Outlook: Recovery Continues, But Fragile

While headline growth appears solid, structural headwinds—such as a still-weak real estate sector and external uncertainties—mean that policy support may continue into the second half of 2025.

Related Reads on Tredu:

  • China June PMI Suggests Improving Economic Activity
  • What Rising Oil Prices Mean for Asian Importers
  • CPI vs. PPI: What the Divergence Says About China’s Economy
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