China's Economy Resilient: Consumption Surges Despite US Tariff Challenges in May

China's economic data sent mixed signals in May, with US tariffs continuing to weigh on the country's manufacturing and exports but domestic consumption picking up slightly in the run-up to a major online shopping festival.

Retail sales, which measure consumer spending, increased by 6.4% in May, up from the 5.1% growth recorded in April, according to data released by the National Bureau of Statistics on Monday.

The numbers surpassed the prediction of 4.85 percent growth provided by financial data company Wind.

Are you looking for insights into the most significant issues and global trends? Find your answers here. SCMP Knowledge Our updated platform features handpicked content including explainers, FAQs, analyses, and infographics, all provided by our acclaimed team.

The robust consumer data emerged as China prepares for one of its biggest online shopping events of the year on June 18th, coinciding with the government’s ongoing efforts. boost consumer spending via a trade-in programme For home devices and additional everyday items.

By the end of May, China’s trade-in program had accumulated approximately 1.1 trillion yuan ($153 billion) in sales for the year, as reported by the Ministry of Commerce. Nonetheless, certain areas have halted their programmes In recent weeks, this has occurred because of insufficient funds.

Zhang Yuhan, principal economist at The Conference Board's China Center, said the retail data "appeared to be strong" - especially in the dining and home-appliances segments - which was likely driven by "holiday effects combined with the continued effects of consumption-promoting policies".

Sales of household appliances and audiovisual equipment surged by 53 per cent in May, after growing by 38.8 per cent in April, according to the NBS.

However, Zhang pointed out that "trade tensions between China and the U.S., low industrial product prices, and a lackluster real estate sector will serve as limitations on economic expansion" moving ahead.

According to the NBS statistics, industrial production, impacted by American tariffs and intense internal rivalry, increased by 5.8 percent compared to the previous year in May.

This figure was below the 6.1 percent growth noted in April, yet it surpassed Wind's prediction of a 5.66 percent increase.

It remains uncertain for how much longer exports will be able to maintain their pace as we move into the latter part of the year.

Zhang Zhiwei, economist

According to the NBS, the Chinese economy has managed to stay resilient despite facing numerous challenges.

"In the future, China possesses ample policies designed to adapt dynamically according to changing circumstances and will persist in offering robust backing for sustaining steady and resilient economic expansion," stated NBS spokesman Fu Linghui.

This information followed closely after a three-month minimum for export expansion mentioned last week, even though the U.S. decreased duties on Chinese products took effect in mid-May In May, China's exports to the U.S. saw a significant drop of 34.5 percent compared to the previous year.

Nomura noted in a report that the impact from the reduction of U.S. tariffs could be more pronounced in June, since it may require several weeks to reinstate the logistics system that was disturbed almost leading to a complete halt akin to a U.S.-China trade embargo.

In the initial five months of 2025, China’s national fixed-asset investments increased by 3.7%, missing the forecast of 4.04% from Wind. This marks a slight deceleration compared to the 4% growth recorded in the January-April timeframe.

Property investment, which has heavily burdened the economy for a long time Following solvency problems at multiple prominent real estate companies, the situation continued to deteriorate. The metric declined by 10.7 percent year over year during the January-May period, compared to a 10.3 percent decrease in the initial four-month span.

Sales of new homes based on floor area dropped by 2.9 percent during the initial five-month period, following a decline of 2.8 percent in the first four months.

The sales revenue of China’s top 100 real estate companies dropped by 7.1 percent year over year from January to May, which marks an increase in the rate of decrease compared to the 6.7 percent drop seen in the January-to-April timeframe, as reported by China Real Estate Information Corp.

Zhang Zhiwei, who serves as both the president and chief economist at Pinpoint Asset Management, warned that the future trajectory of China’s economy remains unclear, noting that May’s statistics delivered “conflicting signals.”

He stated that advancing export efforts has supported the manufacturing industry up until now this year. However, it remains uncertain whether these exports will maintain their pace as we move further into the latter part of the year.

With US tariffs set to stay elevated And with exporters encountering wider limitations, export expansion may decelerate even more as the year comes to an end, Capital Economics' China economist Huang Zichun predicts.

Huang stated that this year’s budget indicated that financial assistance would decrease during the latter part of the year. Additionally, the continuing decline in the real estate sector was anticipated to keep exerting pressure on economic expansion.

Combined, these elements suggested a continued slowdown in economic activity, with overall growth expected to reach around 3.5 percent for the entire year, he noted.

In another area, the total urban unemployment rate for May was recorded at 5%, which is down from 5.1% reported in the previous month, according to official statistics.