China’s Economy Defies Expectations Again with 5.2% GDP Growth — What’s Behind the Surprise?

 

Explained: Why China’s GDP Numbers Are Surprising the World – Again

China’s economy is once again making headlines—and for a good reason. For the second quarter in a row, it has outpaced global expectations, defying predictions of a slowdown. According to the latest official data released on Tuesday, China’s Gross Domestic Product (GDP) grew by 5.2% between April and June 2025 compared to the same period last year. This performance follows a robust 5.4% growth in the first quarter and puts the country well on track to meet its full-year growth target of "around 5%."

What’s especially noteworthy is that this rebound comes despite some heavy economic headwinds—particularly from the United States, where President Donald Trump’s administration has continued to impose high tariffs on Chinese goods. These trade tensions were expected to dampen growth, yet China’s economy has proven surprisingly resilient.

Why the Numbers Are Raising Eyebrows

Analysts across the globe had forecasted a more modest 4.5% growth rate for the second quarter. The better-than-expected figure is the second such surprise in 2025, indicating that China’s economy may be more adaptable than many assumed. But this does not mean all is smooth sailing.

Despite the strong performance in the first half of the year, most experts remain cautious. There are widespread expectations that the second half of 2025 could see a cooling off, driven by both internal and external factors.

The Bigger Picture: What’s Driving China’s Economy?

To understand the present, it's important to look at the journey China’s economy has taken over the past few decades.

For over 30 years, China saw phenomenal growth powered by a combination of mass-scale manufacturing, aggressive infrastructure development, and booming exports. Cities mushroomed, roads and railways expanded, and factories churned out goods for the world. This made China the "factory of the world" and a dominant player in global trade.

However, this growth model came with its own vulnerabilities. China’s economy became heavily reliant on two pillars—exports to other countries, and a domestic real estate sector that kept ballooning. Over time, these pillars turned into pressure points.

As global attitudes have shifted away from free trade and towards economic nationalism, demand for Chinese exports has started to soften. Countries are rethinking supply chains, imposing tariffs, or promoting local manufacturing. China’s share of global exports, though still substantial, isn’t what it used to be. Yet, even today, exports still account for about 20% of China’s GDP—highlighting how important they remain to the country’s overall economic engine.

Domestic Challenges at Play

On the home front, China is also grappling with deeper issues. The real estate sector, once a major driver of growth and investment, is struggling. Several large property developers have faced liquidity crises in recent years, leaving half-built housing projects and denting investor confidence.

At the same time, China is dealing with demographic challenges, including a declining birth rate and an aging population, which pose long-term risks to labor supply and consumption. There’s also the growing pressure on the government to shift the economy from investment-driven growth to one that is more consumption-led and sustainable.

To manage these changes, Chinese policymakers have been introducing a mix of stimulus measures, monetary policy adjustments, and reforms aimed at stabilizing key sectors. Whether these efforts can offset the slowdown in exports and real estate remains to be seen.

What Lies Ahead?

While the current GDP numbers are encouraging, China’s long-term economic story is still being rewritten. The country is clearly trying to move towards a more balanced growth model—less dependent on the rest of the world and more reliant on its own people and markets.

But that transformation isn’t easy. It takes time, careful planning, and a delicate balancing act between reform and stability. For now, though, China has shown that it can still surprise the world—and stay a step ahead of the doom-and-gloom predictions.