KPMG China released the Q2 edition of the 2025 China Economic Monitor (CEM). The report analyses the latest trends in the macro economy and policy developments.
China’s real GDP grew by 5.4% year-on-year (YoY) in Q1 2025, matching the growth rate in Q4 2024 and exceeding market expectations. The robust start of China’s economy was fueled by proactive policies implemented since last September, as well as front-loading exports ahead of US reciprocal tariffs. But the growth of major economic indicators including industrial production, retail sales and fixed asset investment marginally slowed in April due to the escalation in China-US tariff tensions.
The substantial progress in China-US trade negotiations in May is expected to alleviate the downward pressure on China’s economy for the rest of Q2 2025. Given the lingering uncertainties in global trade following the 90-day pause, Chinese enterprises are likely to accelerate their exports, thereby driving strong performance in China‘s industrial production and manufacturing investment in Q2.
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