China’s economy is showing signs of strain, as ongoing trade tensions and a prolonged real estate slump take a toll on growth.
According to official data, the world’s second-largest economy grew by 5.2% in the second quarter of 2025 compared to the same period last year, down from 5.4% in the previous quarter. The slowdown comes despite Beijing’s efforts to bolster economic activity and a fragile trade truce with the United States.
“The economy withstood pressure and made steady improvement despite challenges,” China’s National Bureau of Statistics said in a statement.
The data also revealed that new home prices in June fell at the fastest monthly rate in eight months, highlighting ongoing weakness in the property sector. Despite multiple policy interventions to stabilize the housing market, real estate continues to be a major drag on overall growth.
Analysts say China may fall short of its annual growth target of “around 5%” this year. “The real question is by how much,” said Dan Wang, China director at consultancy Eurasia Group. “We believe the government will defend a floor of 4%, which remains the minimum politically acceptable level.”
China’s slowdown comes against the backdrop of lingering trade tensions with the United States. A tariff war between President Xi Jinping and U.S. President Donald Trump led to the U.S. imposing 145% duties on Chinese imports, while Beijing responded with its own 125% tariffs on American goods.
While both sides have paused the tariffs following negotiations in Geneva and London, they now face a deadline of August 12 to reach a long-term agreement. Meanwhile, Washington has extended its tariff strategy to other countries with close economic ties to China, further complicating the global trade landscape.
