China’s economy expanded by 5.3 percent in the first half of 2025, exceeding expectations and prompting multiple major international banks to revise their full-year growth projections upward.
Key economic indicators demonstrated resilience in the first half of the year. Industrial output from major firms rose 6.4 percent, buoyed by a 9.5 percent surge in high-tech manufacturing.
Retail sales, a critical gauge of consumption, climbed 5 percent, marking an acceleration from the first quarter. Meanwhile, exports grew 7.2 percent during the same period.
Following the data release, multiple financial institutions have raised their 2025 GDP projections for China.
Morgan Stanley has lifted its forecast from 4.5 percent to 4.8 percent, citing export resilience and proactive fiscal policy; UBS has revised its estimate sharply from 4.0 percent to 4.7 percent; and Goldman Sachs has nudged its forecast up from 4.6 percent to 4.7 percent, according to Global Times.
Meanwhile, ANZ has upgraded its projection from 4.2 percent to 5.1 percent, one of the most bullish adjustments, reported Bloomberg.
Analysts attributed the upgrades to robust global demand for Chinese goods, supportive government trade policies, and improving corporate earnings. A rebound in tourism has also bolstered domestic consumption.
While the economic outlook has improved, some banks warned of potential challenges ahead, noting that export growth could slow in coming months, which might dampen economic expansion. Although additional policy support is expected, its scale will depend on upcoming economic data.
Market sentiment improves
The brighter economic picture is lifting investor confidence in Chinese equities. Citigroup has upgraded Chinese consumer stocks from “neutral” to “overweight,” according to CNBC.
On the other hand, Invesco’s Asia ex-Japan CEO Martin Franc highlighted growing investor interest in China’s tech sector.
“A consensus is growing that the opportunity set around China is unique and compelling, especially relating to the evolving technology ecosystem,” Franc said.
“Investors are becoming increasingly convinced of China’s innovative leadership in major technology segments and don’t want to be left behind.”