China’s Economy in H1 2025: Growth, Trade Shifts, and Investment Patterns

China’s economic performance in the first half of 2025 reflects both resilience and adjustment as the country navigates a complex global environment. The data released for the period highlights steady GDP expansion, shifting trade flows, and evolving foreign investment dynamics—all of which underscore the broader transformation of China’s economic structure.

Steady GDP Growth with Structural Support

China’s gross domestic product expanded by roughly 5 percent year-on-year in the first six months of 2025. This figure keeps the country broadly in line with government growth targets, while also demonstrating the stabilizing effects of policy support and domestic consumption.

Manufacturing and services both contributed significantly. The industrial sector benefited from continued investment in advanced technologies, renewable energy, and high-end manufacturing. Meanwhile, the services sector, including logistics, e-commerce, and financial services, acted as a counterweight to weaker external demand.

Importantly, domestic consumption continued to grow, driven by retail sales and household spending, reflecting the ongoing transition toward a more consumer-led growth model.

Trade: Diversification Amid Global Headwinds

Trade figures reveal how China is recalibrating its role in global supply chains. Exports grew modestly, supported by demand for electric vehicles, batteries, and green technologies, though traditional manufacturing exports saw more muted performance due to slowing demand in Europe and North America.

On the import side, energy and agricultural purchases increased, reflecting both domestic consumption needs and efforts to secure supply chains amid geopolitical uncertainty. This indicates a broader strategy of diversification, with stronger trade linkages forming in Asia, Africa, and Latin America to reduce reliance on Western markets.

The shift suggests that while global headwinds persist—especially with protectionist measures and supply chain fragmentation—China’s export strategy is increasingly anchored in emerging markets and new-energy industries.

Foreign Direct Investment Trends

Foreign direct investment (FDI) into China remained stable, though growth has slowed compared with previous years. Official figures show inflows concentrated in high-value sectors such as biotechnology, semiconductors, green energy, and advanced manufacturing.

At the same time, some foreign firms have adopted a more cautious stance due to global uncertainties, ranging from regulatory changes to geopolitical tensions. However, China continues to attract capital with large-scale industrial zones, incentives for technology transfer, and continued integration of pilot free trade zones.

Outbound investment also grew, with Chinese companies seeking opportunities abroad in infrastructure, digital services, and resource security, further emphasizing the country’s dual role as both capital recipient and exporter.

Policy and Macro Environment

Policy support has been central to stabilizing growth. The government’s monetary easing measures and targeted fiscal spending helped offset global demand weakness. Sectors such as infrastructure, renewable energy, and digital economy development received particular attention, aligning with Beijing’s long-term strategy to modernize its economic base.

The macro environment remains favorable: low inflation, stable employment trends, and improving credit conditions have all contributed to maintaining steady growth momentum. Yet policymakers remain cautious, balancing stimulus with efforts to contain systemic risks in property markets and local government debt.

Outlook for the Remainder of 2025

Looking forward, China’s economic trajectory will depend on the balance between external challenges and domestic reforms. Sluggish demand in advanced economies may weigh on exports, but the strength of domestic consumption and continued investment in high-tech industries could sustain momentum.

For global investors, the first half of 2025 highlights a critical point: China is less dependent on low-cost manufacturing exports and increasingly positioning itself as a hub for green technologies, advanced industries, and services. This transition, though uneven, is reshaping how China interacts with global markets and how foreign firms engage with the world’s second-largest economy.