Growth Dragons Weekly: China GDP Up 5.2%, Baidu-Uber Robotaxis, GDS Debuts DC REIT, Pop Mart Profits to Jump 350%, WuXi AppTec Earnings Set to Double
What happened in China this week:
China Q2 2025 Grew 5.2%: What’s Good, What’s Worrying
Baidu and Uber Join Forces to Launch Apollo Go Robotaxis Globally
Pop Mart Expects To Triple Profit in H1 2025 — Labubu Mania Still Going Strong
WuXi AppTec Projects 106% Profit Surge on 21% Revenue Growth
GDS Launches RMB 2 Billion Data Center REIT in China
#1 China Q2 2025 Grew 5.2%: What’s Good, What’s Worrying
China’s economy expanded by 5.2% year-on-year in Q2 2025, slightly beating economists’ expectations of 5.17%. While this keeps the country broadly on track to hit its full-year growth target of around 5%, it also marked a slowdown from Q1’s 5.4% pace. First-half growth now stands at 5.3%. However, the headline figure papers over a more fragile recovery beneath the surface, as deeper data reveals persistent weakness in domestic demand, investment, and the struggling property sector.
Retail Sales & Consumer Confidence
Retail sales rose 4.8% YoY in June, slowing from 6.4% in May.
Much of the earlier boost was driven by short-term government incentives, such as a 300 billion yuan (US$41.8 billion) trade-in scheme for vehicles and appliances. One clear beneficiary has been ATRenew, China’s largest pre-owned electronics platform, which saw a 17% YTD growth.
But beneath the surface, deeper structural issues persist: stagnant incomes, rising job insecurity, and tighter access to credit continue to erode long-term consumer confidence.
Property Sector: Still Falling
Real estate investment plunged 11.2% YoY in H1—the steepest drop since early 2020.
Prices continued falling across all city tiers, despite local-level easing. The drag comes from a toxic mix of:
Oversupply in lower-tier cities
Weakening demand
Lingering concerns about developers’ financial health
Investment & Industrial Activity: Confidence Still Lacking
Fixed-asset investment grew 2.8% in H1, down from 3.7% in Jan–May.
Private sector investment fell 0.6%, reflecting weak business sentiment.
Industrial production rose 6.8% in June, the fastest this quarter, but…
Capacity utilization fell to 74%—the second-lowest Q2 reading since 2013.
This shows that while factories are running, much of their capacity remains idle.
Exports: Bright Spot with Caveats
Exports rose 5.9% in H1 and 5.8% in June. Gains were supported by:
Improved U.S.-China trade ties
Front-loading ahead of tariff expirations
Robust demand from Southeast Asia and Europe
But dark clouds loom: U.S. tariffs still exceed 40%, global demand is expected to soften, and risks to indirect export routes remain high.
Shifting Growth Engines: Consumption Rising—Barely
The National Bureau of Statistics noted that consumption contributed 52% to GDP growth in H1, up from 31.2% from exports. This tilt toward domestic demand is a step in the right direction, but it remains fragile given continued pressure on household income and job stability.
Auto Sector: Booming Volumes, Crumbling Margins
Nowhere is China’s uneven recovery more apparent than in the auto industry—especially new energy vehicles (NEVs).
Shipments rose 12.6% in the first five months of 2025, but retail sales value actually fell 1.9% YoY. Why? Prices have likely dropped 10% or more.
Customs data shows car export volume rose 15.2%, while value grew only 5.3%.
The fall in prices reflects tech improvements, intense price wars, and overcapacity.
And financial stress is building fast.
From 2019 to 2024, revenue for eight major listed automakers rose 52%, but:
Accounts payable jumped 126%
Inventory surged 152%
Case in point: BYD’s revenue skyrocketed 508%, but payables climbed 973% and inventory rose 354%.
Component suppliers are increasingly strained. The mismatch between revenue and liabilities points to growing vulnerabilities: falling prices, delayed payments, and stockpiles of unsold vehicles. While government support has helped cushion the impact so far, the risks are rising.
Bottom Line
China’s economy delivered solid top-line growth in H1 2025, bolstered by exports and early stimulus. A slow pivot toward consumption-led growth is a welcome sign. But beneath the surface, the recovery remains unbalanced and brittle—dragged down by weak private investment, a still-unresolved property slump, and rising financial strain in key sectors like autos.
With large-scale stimulus unlikely, Beijing may lean on targeted, incremental policy support to steer the economy through the second half. We believe China is on track to meet its 5% growth target for 2025, but expecting a significant upside surprise may be unrealistic.