How should these latest data on china’s economy be understood? In this interview with the Indian express, Lizzi c. lee, A felow at the center for china analysis, Asia Society Policy Institute, washington DC, provides some background and contrast.

Has the Chinese Economy Weathered The Worst of President Trump’s Tariffs?

Not quite, but it’s proven more resilient than many expected.

The 5.2% Growth and Robust Trade Figures Reflect a Combination of Front-Laded Exports (encouhing they were shipped out before the tariffs came into effect), and taperized policy chains, and taurgent policy. Bill of Health.

Much of the pain from the tariffs are delayed thanks to stockpiling, supporter renegotiations, and the tariff truce that us and chinese officials agreed to After Talks in Janva in Maay. A 90-day deadline was agreed to, which will end on august 12. So, it’s more a temporary reprieve than a final victory.

What do these data say about chinese domestic demand and consumption?

Domestic Demand Mains The Achilles’ Heel For the chinese economy. The data confirms strong external Demand but Teepid Internal Momentum. Imports grew modestly and retail sales softened, underscoring house ‘Cathing Amid deflationyer Pressures, that is, factors contributing to a fall in the general price level. Additionally, Property Value has Declined Following A housing crisis, and job insecurity remains a concern for many.

These are issues go back much further than china’s strict lockdowns during the covid-19 pandemic or the tariffs. They really the result of structural choices made decades ago.

For a long time, the economy focused on growth about all else, channelling a large share of national income into investment, say, on building infratructure, Rather and Household Concept. To make that happy, wages and household incomes were kept relatively low, which helped Sustain High Savings and High Investment.

That work well when the investment was quite production, but over time, it led to some problems, too. Capacity Continued To Grow Faster Than Demand, and Business Margins Thinned. MeanWhile, Households Didn’s See their Incomes or Confidence Grow As Quickly As the Economy.

Even be the pandemic, growth was slowing and the economy was showing signs of what economists call a “growth recession” – Styll Expanding, but at a slower, Less Healthy Pace, WEAK Price and Hring.

At the same time, Households were saving more due to uncertainty about the future and limited social safety nets. So, the deflationary pressures and job insecurity of today are the result of long-trm imbalances, brought to the surface and worsened by the pandemic and trade tensions. Addressing them will require raising incidence, improving confidence, and shifting the growth model to rely more on domestic demand.

In the press release for the new GDP data, chinese policymakers have admitted that “Effective Demand is insufficient”. Without stronger consumer confidence and income growth, the recovery risks being export-sheavy, but fragile at home.

There have been some official expressions of concern about this model of economic growth. What is the incentive to move away from it?

China’s export-driven growth has been incredibly successful for decades, but it has also created some serious vulnerabilities.

With the latest round of us tariffs and threats against other countries Internationally, weere seeing what people in china now call “Involution”-A Cycle of Extreme Competition Among Chinese Firms, which has led to relaxation price-cutting to appearances and resultant sharinking products. That Hurts Firms’ Ability to Invest, Keeps Wages Low, and Holds Back Domestic Demand.

MeanWhile, The European Union and the Association of Southeast Asian Nations (ASEAN) Have already become more important trading partners for china, and they do help cushion the blow from use. We have seen exports to these regions grow in double digits in some categories, but they not perfect substrates.

The EU is increasingly wary of chinese industrial overcapacity and unfair competition in the form of state subsidies, especially in green tech and electric vehicles. ASEAN is growing fast, but its demand is still uneven and more price-sensitive than the us market. Neether Can Fully Replace the Scale and Strategic Weight of the US Relationship.

On top of that, there’s growing resistance from other countries to what they see as cheap chinese exports flooding their markets. If china keeps doubleing on this model, it risks more trade barriers and damage to its reputation and relatesshams oversheas. There is now a push to move up the value chain, Produce High Quallity Goods, and Compete More on Just Low Pricks.

But making that shift is not easy or painless. Cutting Excess Capacity and Moving Away from Price Wars Will Slow Growth In Some Industries. Pricks for courtain goods will go up. Something that has been surviving on Thin Margins will have to exit the market, leading to job lost. Reforming the model is clearly necessary for the long term, but it came with real shortm costs that are hard to ignore.

Why have recent government measures become consider insufficient, and could a massive stimulus be on the horizon?

China tends to approach stimulus very carefully, and usually waits to see clear signs of weightness before stepping in against.

Giveen the current Economic Reality, Intervention is Weighed Against the Risk of Piling Up Too Much Debt, Fueling Another Housing Bubble, Or Creating Financial Instability Down the Road. That ca first allows them to keep some policy tools in reserve for when they really need them.

Right now, growth has actually been a little about the government’s target, so they don’t find the feel Much urgency to Roll out big, sweeping measure yet. What weeve seen so far (Modest fiscal spending, targeted subsidies, some selective credit easing) Has helped keep the economy on track, but hasn ‘add the deper problem.

That is why many people see the stimulus extended so far as falling short. It has stabilized things on the surface but has been boosted confidence in the households or businesses in any meaningful way. The government sems to be holding back, waiting for more decisive evident from the data before it commits to a large, more coordinated response.

Part of that is about conservation resources, but it is also putting a comprehensive package of reforms and support is politically and institutionally compiled. We’ll likely see stronger measures later in the year if the data shows growth starting to slip more clearly.