GLOBAL Economic Report: Growth, Wage Struggles, Energy Surges & Global Trade Shifts 17.July.2025

🔹 Overview

China’s economic report for July 17, 2025, displays some resilience, volatility, and global implications. Overall, GDP growth is steady, although underlying vulnerabilities in domestic consumption, wages, and energy stresses suggest that foundations remain tenuous. With exprong tactics and policy alternatives on the table, China’s economic actions in the coming months could tip global markets.

In this substantive report, we begin with all of the relevant documents to better understand China’s recent economic performance, specific sectoral movements, and geopolitical signals to illustrate how the world’s second largest economy is navigating through tumult.

Q2 Economic performance: GDP growth resiliency of 5.2% YoY

Real GDP grew 5.2% year-on-year in Q2 2025, slightly higher than the study’s forecast of 5.1%. This performance is a minor slowdown from the 5.4% rate recorded in Q1. While industrial production rose by 6.8% in June with strong external demand; retail sales (4.8%), and fixed asset investment (2.8%) continue to reflect lingering persistent domestic weaknesses. A short-term trade truce with the U.S. materially augmented exports and supported, temporarily, their growth.

Nonetheless, at the regional level, growth is still uneven. Coastal provinces benefitted from robust demand for exports, but central and western provinces continue to lag. The geographic disparities raises performance and migration issues.

Wage Pressure and Declining Household Income

Many Chinese households are facing financial pressure despite reported headline growth. Wage cuts, particularly in state-owned enterprises, are common with some households reporting wage losses of up to 24%. Households are now resorting to gig work. Delayed payments from businesses and local governments may also be undermining confidence levels.

Additionally, another wave of social media reports have appeared documenting stories of informal workers’ struggles including delivery drivers, tutors, and factory temps. These stories document a change in the nature of work in China, away from conventional salaried work to gig work characterized by less stability and diminished worker benefits.

Record Energy Use Due to Heat Waves

The widespread heat waves have led to record levels of energy use, where national electricity consumption has peaked at 1.5 billion kilowatts of demand. The potential for power rationing over the summer is creating panic particularly in industrial centres located in the south. A power outage at this time could be devastating for production and logistics.

Some provinces are starting energy-saving campaigns in government offices and in factories. In addition, with the strain on the grid, discussions have rekindled around accelerating the transition to renewable energy which will help optimize efficiency while relying less on coal during peak demand.

Conflicting Signals in Commodities and Industrial Data

For the month of June, steel production fell 3.9% on a month-over-month basis and 9.2% year-on-year, which indicates softer domestic construction activity. At the same time, imports of iron ore were the highest on record in 2025, which would indicate government-supported stockpiling or stimulus in its early stages. Coal production improved slightly at 5%, the usage fell marginally, which may indicate better efficiency usage of power or maybe an industry slowdown.

By contrast, copper imports increased by 12%, suggesting that there are some renewed investments in the power grid or infrastructure projects. Analysts interpret these commodity changes as strong indicators of Beijing’s preparation for a stimulus program rather than organic growth.

Tariff Evasion: Surge In Semi-Finished Steel Export

Chinese steelmakers are increasingly exporting semi-finished billets so as to evade foreign tariffs. Since January of this year, semi-finished steel export capacity has tripled. As exporting semi-finished steel allows manufacturers to avoid paying pay tariffs, it is providing some short-term relief to maintain export revenues, while raising suspicion with international trade partners and encouraging debate about credibly taxing such lower-value exports domestically.

While there are some short-term benefits to this strategy, there are long-term consequences to consider. Global trading partners facing dearly triggered retaliatory measures may request the WTO to pressure the Sino regime to tighten these exports. Domestic advocates are pushing the government to reconsider steel subsidies on lower-value exports and start promoting higher value steel goods.

Escalating Pressures from Tariffs from the United States

Continuing pressures from tariffs from the United States continue to stifle manufacturing and exports. As businesses respond, Beijing is moving ahead with a new cycle of fiscal- and monetary-policy stimulus measures. Analysts believe these will occur after the upcoming Politburo meeting and will mainly be directed at targeting some combination of small firms, households, and infrastructure.

Many people within the business community are optimistic any future measures would additionally include tax incentives to encourage exporters, and an adjustment to lending policies that could enable greater capital access for SMEs. Without these weakened and extended cash mechanisms many businesses face the certain risk of insolvency or retrenchment.

Deflation Sentiments and Interest Rate Issues

China’s nominal growth and headline inflation are now below growth rates for real GDP, leading some participants to express fear or concerns regarding the prospects for deflation. Bankers and other policymakers are now also discussing whether they should now proactively induce zero or near-zero interest rates for a small period of time before any ensuing inflation. While such measures may benefit lending capacity there are still concerns about bank profitability issues, possible capital flight of interest rates were to increase to 3-4% as comparables, and concerns related to new asset bubbles.

The People’s Bank is attempting to utilize new tools such as digital yuan stimulus pathways, or regional interest rate experimentation. As for economists, there is a range of views between advocates of aggressive monetary easing or even full scale monetary policy easing approach, and others preferring more targeted or structural types of support.

China’s control over rare earths maintains its monopoly on critical technology supply chains. To date, no other country has come close to matching China’s 91% global share in rare earth refining, and while other countries and company have made efforts at diversification, none have been able to scale rare-earth alternative offerings. China’s position on that front is still a strategic one, especially as it relates to battery technology, defense, and AI hardware.

China’s policy announcements indicate that they intend to “streamline” rare earth mining under state-owned monopolies to be able to capture as much control over the sector as possible, including pricing power. This should create gain more political leverage, but it will also expose them more to scrutiny.

In summary:

China’s recent economic report, published July 17, reveals a complicated mix of strength and weakness. China’s GDP grew by 5.2% in the second quarter surpassed expectations due to strong exports and a temporary cessation of “US-China trade hostilities.” In contrast, weak domestic demand is indicated by declining retail consumption, slow investment, and culling of wage payments has raised worries about whether Chinese citizens will be active participants in the Chinese economic recovery.

Industrial production continues to outpace other economic indicators; however, households’ confidence is low due to wage culls and widespread delays in payment. In fact, most families are currently trying to cover their current wages with informal or gig work – highlighting weakness in the labor market. On the other hand, demand for electricity usage has hit unprecedented levels with severe heatwave raging combined with rising levels of electricity cutoffs from previous surges (rising concerns over electricity rationing overheating the factory or logistics networks too!)

The situation with commodity data is mixed, with steel production plunging, yet iron ore and copper imports hitting record highs, indicating government readiness for stimulus, while at the same time exporting “semi-finished” billets to avoid tariffs, putting pressure on global trade tensions and igniting an internal debate about new export duties.

Looking ahead, U.S. tariffs will continue to weigh on China’s economy. The policymakers are expected to announce new stimulus measures after the Politburo review of the economy, and the most contentious debate concerns interest rates, as some are calling for the zero rate to counteract deflationary signals, despite fears that could lead to instability in the financial system.

China’s ongoing position of power in the dominant rare earths supply chain also evolved global economic dynamics. The West still have difficulties matching the scale of China’s rare earths industry while Beijing’s comparative advantage with its full complement of sectors tied to modern technology continues. Any formal consolidation in this economic zone could only strengthen collaboration with China but provoke more widespread retaliation from trading partners.

Ultimately, the roads ahead for China’s economy become increasingly strategic reliance on stimulus, energy management, and trade diplomacy. Decisions made out of Beijing as one of the largest engines of global economic growth will resonate far beyond company HQs and government offices.

10 Critical Discussion Questions

1. Can China maintain export-driven growth while domestic consumption remains weak?
2. How effective are Beijing’s fiscal stimulus measures likely to be in boosting household income and confidence?
3. Will record-breaking energy consumption lead to long-term power shortages or rationing?
4. Is the surge in billet exports a temporary trade workaround or a permanent shift in industrial strategy?
5. Should Beijing consider structural reforms over short-term stimulus to address core weaknesses?
6. How would a zero-interest rate policy impact China’s banking sector and housing market?
7. Can Western countries realistically reduce their reliance on China’s rare earth supply chains?
8. How might the global economy react if China falls into a deflationary spiral?
9. What are the risks of China’s tariff evasion strategies escalating trade disputes?
10. What lessons can emerging economies draw from China’s current mix of challenges and strategies?