China’s economy picks up in June on rebounding U.S. exports, analysts say

China’s economy is showing signs of picking up, thanks in part to a rebound in shipments to the U.S.

“Manufacturing saw the clearest improvement. Retail sales recovered nicely,” according to the China Beige Book, an independent survey of Chinese businesses, on Monday. The survey, covering 1,321 businesses from June 1 to 22, pointed to a surge in luxury goods sales, but weaker tourism-related spending.

“The second quarter is ending on a more positive note than it began, but this performance will need to repeat itself in July and August for there to be legitimate cause for celebration,” the report said.

The world’s second-largest economy lost steam in April and May after a strong first quarter. In May, China’s retail sales fell for the first time since the pandemic, official figures showed, while data from the 618 shopping festival, which ran from mid-May through mid-June, showed a sharp slowdown in sales growth.

Investment in manufacturing, dragged down by declines in metals, chemicals and auto production, fell in May on a year-to-date basis for the first time since December 2020, according to Chinese financial-data provider Wind Information.

But in June, the Beige Book said factory activity “accelerated,” and “U.S.-bound orders again saw sharp year-on-year gains.” China’s exports to the U.S. have picked up in recent months, growing 11.3% and 35.4% in April and May, respectively, following double-digit declines for most of last year when President Donald Trump ratcheted up levies on Chinese goods.

Freight rates for shipping between Asia and the U.S. have climbed to their highest in nearly two years, S&P Global said last week, attributing the surge to importers frontloading shipments ahead of higher fuel surcharges and price hikes from Asian suppliers. The stockpiling could taper off by late July, it said.

China’s export order growth to Asia and other developing countries, however, slowed in June from May, while growth of those to Europe held steady, the Beige Book found.

Trump’s meeting with Chinese President Xi Jinping signaled tariffs will likely remain lower for now, while the U.S. has yet to impose additional duties that could emerge from Washington’s Section 301 probes targeting countries identified for overcapacity and forced labor practices. The 10% duty on goods from most major trading partners that Trump imposed under Section 122 is set to expire on July 24.

Businesses are rushing to ship goods to the U.S. before tariffs potentially surge again, said Tianchen Xu, senior economist at the Economist Intelligence Unit.

Reflecting a trade recovery, China’s exports to the U.S. in May reached nearly 90% of levels seen in 2024, according to official data. In contrast, May 2025 figures showed China’s exports to the U.S. had dropped to 70% of their 2024 levels.

“China’s weak momentum likely turned around in June,” said Xu, adding that “the improvement was still first and foremost led by the external sector.”

He added that strong demand for artificial-intelligence technology and components, as well as falling oil prices in the wake of easing tensions around the Strait of Hormuz, will help soften the pressure on China’s economy.

China is scheduled to release retail sales and industrial data for June, as well as second-quarter GDP, on July 15. It is expected to report June trade data on July 14.

The earliest official read on June economic performance is due out Tuesday, with the National Bureau of Statistics scheduled to release the official manufacturing purchasing managers’ index. The measure of business activity is expected to climb into expansionary territory with a 50.1 print in June, according to a Reuters poll.

Goldman Sachs on Sunday revised up its third-quarter GDP growth forecast to 5% from 4.5% quarter-on-quarter annualized, on the anticipation of lower oil prices and faster fiscal spending over the next few months, after a tepid second quarter for which it predicts growth of 3.5%.