Industrial robots carry out welding operations in an intelligent workshop of an automobile manufacturer located in Jiangdu Hi-tech Industrial Development Zone, Yangzhou, East China’s Jiangsu Province, on October 18, 2024. China's GDP grew 4.8 percent year on year in the first nine months of 2024, data from the National Bureau of Statistics (NBS) showed on the day. Photo: VCG

China's official scorecard for the first half of 2025 defied the forecasters. Western commentators had anticipated that challenges in the property market would bring down the entire economy. Instead, China's first half 2025 growth reached 5.3 percent amid global challenges, while the US, EU and Japan all estimated to grow at less than 2 percent.

This unexpected resilience highlights the strength of China's economic fundamentals and its ability to adapt to shifting market conditions.

Behind the strong GDP growth numbers are a reported rebound in consumer spending, up 5 percent year-on-year, a remarkable expansion of high-tech industries, up 9.5 percent, plus export growth, measured in US dollars, of 5.9 percent.

China's industrial output experienced a faster growth of 6.8 percent year-on-year in June, as the world's second-largest economy intensified its efforts to bolster growth. Notably, the production of 3D printing equipment, new-energy vehicles, and industrial robots surged by 43.1 percent, 36.2 percent, and 35.6 percent in the first half of the year.

The job market remained generally stable, with the surveyed urban unemployment rate averaging 5.2 percent. The per capita disposable income reached 21,840 yuan ($3,042), marking a 5.3 percent year-on-year increase in nominal terms, indicating an overall improvement in the financial well-being of the population and suggesting a positive outlook for future consumer spending and economic activity.

In response to external challenges, China has made boosting domestic demand a key priority, implementing a range of measures to stimulate consumption in the first half of 2025. Despite ongoing challenges and uncertainties, China is actively taking steps to maintain stability and sustain growth momentum in the months ahead.

Gary Hufbauer Photo: Courtesy of Gary Hufbauer

Some observers find it hard to reconcile robust Chinese growth with a decline in the producer price index (PPI), which fell by 2.8 percent year-on-year in the first half of the year, alongside almost no change in the consumer price index (CPI). An explanation can probably be found in the combination of rapid supply side growth among China's manufacturing industries and downward pressure on the rental cost of housing.

The relatively low level of price increases in China actually carries a silver lining. It enables the relevant departments to implement expansive fiscal and monetary policies in the form of special programs to stimulate consumer spending and support the property market, and to make credit available at low interest rates.

The Chinese equity market evidently believes that reported economic growth is real, and that China is indeed growing faster than the US. Chinese shares on Hong Kong's Hang Seng Index are up more than 20 percent since the end of 2024, compared to around 6 percent for US shares in Dow Jones Industrial Average during the same period.

China's economic strength provides a welcome offset to dire predictions from the IMF and OECD about a slowing global economy during 2025. If China keeps up its growth path for the second half of 2025, that should stimulate Asian and Latin American countries that sell raw materials, intermediate products, and finished goods to the vast Chinese market.

China's strong exports in the first half of 2025 are something of a surprise, given the adverse impact of high tariffs on exports to the US. Exports of "new three" products to world markets - electric vehicles, lithium batteries, and photovoltaic products - are largely responsible for China's success. Not only are green exports good for the Chinese economy, but they also make a significant contribution to limiting global carbon dioxide emissions.

All in all, a welcome report from China. The steady economic growth observed in the first half of the year has established a strong foundation for meeting the annual growth target, and the implementation of more proactive macroeconomic policies will contribute to the stable operation of the economy.

The author is a non-resident Senior Fellow at the Peterson Institute of International Economics. bizopinion@globaltimes.com.cn