China relies on the diversification of its exports
The main support of this growth remains the dynamism of exports. Indeed, according to the South China Morning Post, these increased by 5.8 % in June compared to the previous year, exceeding the analysts’ forecasts and despite an obvious drop in deliveries to the United States. China has succeeded in bypassing American customs duties by redirecting part of its goods via in particular countries in Southeast Asia, such as Vietnam, which benefits from more advantageous customs duties with the United States. This drop in direct deliveries with the United States has thus been offset by high demand from Southeast Asia and Europe, allowing China to maintain its central role in world trade.
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If this trend is maintained, Beijing could then reach, or even exceed, its growth objective of 5 % for the whole of the whole year 2025. However, exports are not the only lever of this growth and the next application of new customs duties which could soon come into force between the USA and China, leaves economic uncertainty.
Other sectors do not follow
Despite encouraging growth results, a major sector could darken the next balance sheets. Indeed, investments in the real estate sector fell by more than 11 % in the first half of the year, with an even more observed drop in June. This trend, combined with others, could really slow down the annual growth of China. According to Business Insider, since the start of the Chinese real estate crisis which started in 2021, real estate prices have dropped by 20 % and could reach -30 % by 2027. A trend that had accentuated later with the resounding bankruptcy of the Chinese real estate giant Evergrande.
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In addition, retail sales, a key indicator of household behavior, have also shown signs of slowing down, falling by 4.8 % in one year, according to The Strait Times. This, despite an injection of 300 billion yuan (41.8 billion dollars) by Beijing in a recovery program aimed at stimulating the purchases of vehicles, appliances and other goods.
