China’s economy has demonstrated resilience in the face of President Donald Trump’s trade war, with the country’s gross domestic product (GDP) expanding by 1.1 percent from April to June.
According to official data, China’s economy grew by more than 5 percent in the second quarter, staying on track to meet Beijing’s annual growth target. On an annualized basis, China’s economy grew 5.3 percent in the first half of the year, keeping it in line with Beijing’s full-year target of about 5 percent growth.
The National Bureau of Statistics attributed this steady growth to “more proactive and effective macro policies” implemented in the first half of the year. “Generally speaking, with the more proactive and effective macro policies taking effects in the first half year, the national economy maintained steady growth with good momentum, showcasing strong resilience and vitality,” the statistics agency said in a statement.
Lynn Song, chief economist for Greater China at ING, described China’s economic performance as “certainly encouraging” compared to the “very downbeat expectations at the start of the year”. Song noted that trade data benefited from frontloading in the first quarter, but generally held up better than expected in the first half as a whole. “As a result, industrial production has outperformed,” Song said.
Despite Trump’s tariffs, exports rose by 5.8 percent year-on-year in June, customs data showed, as shipments to non-US markets and a reprieve from the highest duties boosted trade. After US tariffs on Chinese goods soared as high as 145 percent earlier this year, the Trump administration in May reached a deal with Beijing to scale back taxes on each other’s exports for at least 90 days. Under the truce, Chinese imports to the US are subject to a minimum duty of 30 percent, while US exports are subject to a 10 percent rate.
However, Song cautioned that the second half of the year could “prove to be more challenging” due to lingering uncertainty over tariffs. “The tariff uncertainty will remain an overhang, with the next key deadlines coming up soon in August. Though we don’t expect a return to the April peak tariffs, we wouldn’t rule out further escalations,” he said.
The two sides have until August 12 to renew their deal or forge a new agreement to avoid the tariffs reverting to their higher rates. As the situation unfolds, China’s economic growth will likely continue to be shaped by its ability to navigate the complexities of the trade war and find new avenues for growth.