A worker checks autonomous manufacturing line at a workshop in Huangshi, Central China’s Hubei Province. Filephoto: VCG
China’s economy expanded by 5.3 percent year-on-year in the first half of 2025, with second-quarter growth hitting 5.2 percent. This growth rate was even better than some optimistic forecasts by Chinese economists, which underscores the strong resilience of Chinese economy amid global trade and economic volatilities.
The country’s growing momentum is being fueled by at least three advantages — China’s comprehensive and resilient industrial chain, substantial gains from the widespread adoption of latest digital technologies, and long-term dividends from the ongoing optimization and upgrading of its economic structure.
Firstly, comprehensive industrial chain coverage. Even facing global supply chain disruptions, China’s ability to maintain basic stability across the entire spectrum of industrial activity – spanning 41 major, 207 mid-range, and 666 minor industrial categories – has given the economy unmatched resilience. This breadth and depth allow China to quickly adapt, absorb shocks, and maintain continuity in production and innovation.
Secondly, broad digitalization of traditional industries leads to efficiency gains. The slowdown in some of China’s conventional growth indicators occurred amid deep structural transformation and rapid technological advancement. While many analysts point to declines in some traditional metrics, they often overlook the country’s marked productivity gains and substitution effects enabled by digital technologies. These include cost reductions, efficiency improvements, and the incessant emergence of new growth drivers from the digital economy.
Thirdly, the optimization and upgrading of the economic structure. Chinese economy is currently undergoing a profound transformation and upgrading. This shift is driving a broad and deep enhancement across many industrial lines. The pace of this transformation may be outpacing external recognition, as China’s digital transformation and industrial upgrading are ahead of market expectations – potentially placing it ahead of the US in the journey toward a fully digital economy.
Cao Heping Photo: Courtesy of Cao Heping
Major economic indicators in the first half of the year reflected an accelerated shift toward higher-quality growth. Domestic consumption contributed 52 percent to the GDP growth, reaffirming its role as a major growth engine. Services sector sales grew by 5.3 percent, outpacing retail sales of goods at 5.1 percent. And, the consumption upgrade has been driven by a government-backed trade-in program, which incentivized consumers to upgrade to energy-efficient and smart devices and cars.
At the same time, new industries and technologies continued to gain pace. High-tech manufacturing firms above the designated size expanded by 9.5 percent year-on-year, outpacing overall industrial growth by 3.1 percentage points. Strategic service sectors also posted a robust performance, growing nearly 10 percent in the first five months of the year.
The rise of high-end services signals structural advancement in the economy. China is showcasing to the world the key characteristics of a major economy transitioning into a high-quality growth mode. Growth in high-end services – including creative designing, lab-to-market innovation, database management, online platforms development, and open-source innovation – is playing a greater role in boosting the economy. The new services indicate rising structural maturity and growing value-added content.
This transformation, however, is not without challenges. Industries and individuals affected by structural shift face some real difficulties. Yet, this transition also opens up new opportunities and injects long-term vitality into the economy.
China has again reaffirmed its commitment to stabilizing markets, employment, and business expectations, outlining a roadmap to sustain growth momentum while better navigating external uncertainties and challenges. Major policy measures include supporting enterprises, pro-employment initiatives, consumption-boosting moves, and efforts to bolster market confidence in the face of global headwinds. These steps are expected to help China stay on course through the second half of the year.
With the third quarter typically marking a peak in consumer spending, stronger-than-expected GDP growth in this period appears likely. If current growth momentum holds, achieving the full-year growth target of about 5 percent is well within reach. As in previous years, China will always act as a stabilizing force amid global geopolitical and economic uncertainties.
The author is a professor at the School of Economics of Peking University. bizopinion@globaltimes.com.cn