• Trump asserts China's economic struggles, but official data shows 5.3% GDP growth in H1 2025.
  • Industrial output and exports drive expansion, while domestic consumption and real estate lag.
  • Analysts acknowledge structural risks but reject crisis narrative, citing policy-backed resilience.

Diverging Views on China's Economy

Former U.S. President Donald Trump's recent claim that "China's not doing well economically" stands in contrast to Beijing's latest economic reports showing 5.3% year-on-year GDP growth for the first half of 2025. The figures, released last week, reveal an economy still expanding faster than most developed nations, though facing well-documented headwinds.

Industrial production grew 6.4% while services expanded 5.5%, according to people familiar with the matter. Export performance remained surprisingly robust despite elevated U.S. tariffs, with manufacturers reportedly frontloading shipments ahead of potential new trade restrictions.

The Structural Weaknesses

Beneath the headline numbers, familiar challenges persist. Retail sales grew just 5.0%, reflecting continued consumer caution. The property sector remains subdued, particularly outside major cities, with developers still working through debt restructuring processes that began in 2022.

"The growth is real but increasingly lopsided," said one Asia-focused portfolio manager who requested anonymity due to firm policy. "You're seeing state-directed investment and exports carry more weight as private sector confidence lags."

Policy Tightrope

Beijing continues walking a policy tightrope - maintaining enough stimulus to hit its "around 5%" growth target while avoiding measures that could exacerbate local government debt problems. Recent infrastructure spending and manufacturing subsidies appear to be offsetting weaker private investment for now.

Market participants note the unusual stability of China's reported growth figures in recent quarters. "There's clearly some smoothing happening," said an emerging markets strategist at a European bank. "But directionally, the data matches what we see in trade flows and industrial activity."

What Comes Next

Most analysts expect moderate deceleration through 2026 as trade friction accumulates and property sector adjustments continue. The consensus forecast sits at 4.5% growth for 2025, slowing to 4.0% next year according to recent surveys.

U.S.-China economic relations remain a wildcard, with both presidential candidates maintaining tough-on-China trade stances. Some exporters are reportedly accelerating capacity shifts to Southeast Asia as insurance against further trade restrictions.