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China’s Economic Improvement Amid Ongoing Challenges

In early 2025, China’s economy witnessed improvements, highlighted by a 4% increase in retail sales and a 5.9% rise in industrial production. However, persistent issues, especially in the housing market and external pressures from tariffs, pose significant challenges to sustained growth. Industry experts emphasize the need for continued policy support to navigate these difficulties effectively.

China’s economy showed signs of growth in early 2025, with key indicators reflecting improvements. Retail sales experienced a year-on-year increase of 4% in January and February, while industrial production surged by 5.9%, according to the National Bureau of Statistics. This positive data served to uplift stock markets across Asia.

Despite the encouraging figures, the spokesperson for the bureau issued a warning about the challenges that persist. External pressures, such as a 20% tariff on Chinese goods imposed by U.S. President Donald Trump, threaten to impede the economy’s recovery, which heavily relies on exports. “The external environment has become more complex and grim,” stated Fu Linghui during a news conference.

The ongoing real estate crisis continues to adversely affect consumer sentiment and spending, with real estate investments dropping by 9.8% during the first two months of the year. Although declines in housing prices have eased a bit, there is no indication they have hit their lowest point, as new and existing home prices fell at a reduced rate than in the previous year.

ING bank anticipates that while real estate prices may stabilize this year, a quick rebound is unlikely. Lynn Song, the chief Greater China economist at ING, mentioned, “February’s data showed that it would be wise for officials not to take their foot off the pedal in terms of policy support.”

In summary, while the Chinese economy demonstrated encouraging improvement in early 2025, significant challenges remain, particularly in the housing market and external trade relations. Sustained support from government policies will be crucial in addressing these hurdles and fostering economic stability.

Original Source: abcnews.go.com

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