China's Economy Sees Uptick in June Amid Surge in U.S. Exports

China's economy demonstrated signs of renewed momentum in June, with analysts attributing the recovery in part to a significant rebound in exports to the United States. Data from the China Beige Book, an independent survey of 1,321 Chinese businesses conducted between June 1 and 22, indicated that manufacturing saw the clearest improvement, and retail sales registered a notable recovery, particularly in luxury goods. However, the survey also observed that tourism-related spending remained subdued.

The second quarter, which had begun with weaker performance, ended more positively, according to the Beige Book report. It cautioned, however, that continued improvement in July and August would be necessary before drawing conclusions about a sustained recovery. This follows a period in April and May during which China's economic momentum slowed after a robust first quarter. Official figures showed May retail sales fell for the first time since the pandemic, and data from the 618 shopping festival, which ran from mid-May to mid-June, reflected a pronounced deceleration in sales growth.

Investment in manufacturing also declined, with year-to-date figures for May marking the first contraction since December 2020, according to Wind Information, a Chinese financial data provider. The downturn was attributed to reduced output in metals, chemicals, and the auto sector. Despite these setbacks, the Beige Book found that factory activity "accelerated" in June, and there were "sharp year-on-year gains" in U.S.-bound export orders.

China's exports to the United States grew by 11.3% in April and 35.4% in May, reversing the double-digit declines recorded for much of the previous year. That earlier drop had coincided with an escalation of tariffs on Chinese goods by then-U.S. President Donald Trump. S&P Global reported last week that freight rates for shipping goods from Asia to the U.S. climbed to their highest levels in nearly two years, a trend attributed to importers frontloading shipments ahead of anticipated fuel surcharge increases and price hikes from Asian suppliers. The firm indicated that this stockpiling effect could diminish by the end of July.

While U.S.-bound orders surged, the Beige Book noted that growth in export orders to Asia and other developing markets slowed in June compared to May, while orders to Europe held steady. Trade policy developments remain central to the outlook. A recent meeting between Trump and Chinese President Xi Jinping suggested that tariffs would stay at current levels for the time being. The United States had not yet implemented new duties stemming from ongoing Section 301 investigations, which target alleged overcapacity and forced labour issues in certain countries. The 10% tariff on goods from most major U.S. trading partners, imposed under Section 122, is scheduled to expire on July 24.

Tianchen Xu, a senior economist at the Economist Intelligence Unit, said businesses are "rushing to ship goods to the U.S. before tariffs potentially surge again." Official data showed that China's exports to the U.S. in May reached almost 90% of their 2024 volume, a recovery from the same month in 2025, when exports had fallen to 70% of 2024 levels. Xu noted that "China's weak momentum likely turned around in June," emphasizing that the external sector remained the primary driver of improvement.

Demand for artificial intelligence technology and components also contributed to the recovery, according to Xu. Additionally, declining oil prices—resulting from easing tensions around the Strait of Hormuz—were expected to reduce cost pressures on China's economy. The interplay between global energy markets and China's manufacturing sector is seen as a factor influencing overall economic performance.

China is scheduled to release its June retail sales and industrial production data, as well as second-quarter GDP figures, on July 15. June trade data is expected to be reported on July 14. The first official reading of June's economic performance is due with the release of the official manufacturing purchasing managers' index, with a Reuters poll predicting the index will reach 50.1, indicating a return to expansion.

Goldman Sachs revised its third-quarter GDP growth forecast for China upward to 5% quarter-on-quarter annualized, compared to its previous estimate of 4.5%. The revision was based on expectations of lower oil prices and accelerated fiscal spending in the coming months. For the second quarter, Goldman Sachs projects GDP growth of 3.5%, characterizing it as a tepid period relative to earlier expectations.

The broader context for China's economy includes lingering effects from prior periods of weak domestic demand and global trade uncertainty. The recent uptick in exports to the U.S. is set against a backdrop of ongoing policy uncertainty concerning tariffs and trade restrictions, as well as shifts in global supply chain strategies. The sectoral divergence in China's domestic economy—where luxury retail rebounds but tourism and some industrial sectors remain weak—emphasizes the uneven nature of the recovery.

Market participants and policymakers are closely monitoring the potential expiration or escalation of U.S. tariffs, as well as the trajectory of global commodity prices. The behaviour of importers, such as frontloading shipments ahead of possible tariff changes, has introduced volatility into shipping and logistics markets. Analysts note that these dynamics could influence economic metrics reported in the coming months.

Looking ahead, the durability of China's economic recovery remains contingent on several factors, including external demand, domestic consumption trends, and the evolution of trade policy between the world's two largest economies. The scheduled release of June and second-quarter data in mid-July is expected to provide further clarity regarding the sustainability of the recent upturn.