Trump's tariffs and real estate crisis slow down Chinese economy

(Patria) - The Chinese economy is experiencing a slowdown in growth due to trade tensions caused by US President Donald Trump's introduction of tariffs, as well as a prolonged crisis in the real estate market which continues to put pressure on overall activity.

According to official data, the world's second-largest economy grew by 5.2% in the three months ending in June compared to the same period last year. In the previous quarter, growth was 5.4%.

Despite the challenges, China has so far avoided a sharp decline, partly thanks to measures announced by Beijing to support the economy, as well as a fragile truce in the tariff war with the United States.

What led to avoiding a sharp decline?

Growth was, as they state, boosted by the results of the industrial sector, which recorded a 6.4% increase in production, with demand for 3D printing devices, electric vehicles, and industrial robots growing particularly strongly.

An increase was also recorded in the services sector, which includes transport, finance, and technology.

On the other hand, retail sales growth slowed in June to 4.8% compared to the previous year, while it was 6.4% in May.

Also, official data released today shows that new housing prices fell at the fastest monthly pace in eight months in June.

These figures indicate that China's real estate sector continues to struggle with a downturn, despite repeated attempts by authorities to stabilize prices.

Although analysts expected tariffs to have a stronger negative impact, China has shown "great resilience," said Gu Qingyang, an economist at the National University of Singapore.

According to him, growth was further boosted by exports, as companies rushed to deliver goods before potential new tariffs or changes in export strategies came into effect.

The second half of the year, he adds, could bring more uncertainty.

"Therefore, stronger government stimulus will likely be needed. But despite everything, achieving the targeted annual growth of 5% still seems quite feasible."

However, some economists predict that China will not reach the target of "around 5%" growth this year.

"The real question is – by how much. We believe they will defend the lower limit of 4%, which is the politically lowest acceptable level," said Dan Wang, China director at consulting firm Eurasia Group, for the BBC.

The trade war between Chinese President Xi Jinping and Trump led to the introduction of a 145% US tariff on Chinese imports. In response, Beijing imposed a 125% tariff on some American products.

These tariffs were temporarily suspended after negotiations in Geneva and London. The two sides now have until August 12 to reach a long-term trade agreement.

Washington has also imposed high tariffs on countries with close economic ties to China.