China posts over 5% growth despite trade war

Beijing has been grappling with tensions with both the US and EU 

China’s economy grew by 5.3% in the first six months of this year compared to the same period of last year, according to the National Bureau of Statistics (NBS). The expansion comes despite persistent external pressures, particularly escalating trade tensions with the EU and US. 

Growth came in at 5.4% in the first quarter before slowing slightly to 5.2% in the second. The latter figure, however, came in slightly ahead of projections for a rise of 5.1%, according to a Reuters poll.

The World Bank expects China’s GDP growth to come in at 4.5% in 2025 and 4.0% in 2026, while the government has set a target of around 5% for this year. Analysts surveyed by Reuters forecast growth of 4.6% and 4.2% this year and next, respectively.

Beijing is facing an August 12 deadline to reach a long-term tariff agreement with Washington following a preliminary truce reached in June that paused weeks of escalating tit-for-tat import duties.

The latest trade talks have shown cautious progress. China agreed to limited concessions, including easing export controls on rare earths, while the US has resumed exports of Nvidia AI chips. However, key issues remain unresolved, particularly around military-use technologies. If no deal is finalized, global supply chains could face renewed disruption from tariffs exceeding 100%.

READ MORE: Beijing slams EU for including Chinese firms in Russia sanctions

At the same time, Brussels and Beijing have taken some steps toward easing their trade tensions following a temporary de-escalation agreed in early July. As part of the latest agreement, the EU postponed the tariffs on Chinese electric vehicles until August 1. In response, China offered some concessions, including improved market access for European automakers and greater flexibility in the export of critical raw materials such as rare earths. Beijing also eased retaliatory duties on EU cognac imports.