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1. A Sharp Export Slowdown & Factory Stress Despite some front-loading of orders, Chinese customs data reveal a 25 % drop in Sino‑U.S. trade volume in H1 2025; exports to the U.S. tumbled roughly 30 %. Reuters confirms that in May 2025, factory output slowed to a six‑month low of 5.8 % growth, down from 6.1 % in April—a slump linked directly to heightened tariff pressure. Labor-intensive sectors such as textiles, furniture, toys, and electronics have been hit hardest. In Guangdong’s Pearl River Delta, many SMEs saw profit margins compress to 3–5 %, with some shifting 20–30 % of their capacity to Vietnam or Indonesia. As a result, local unemployment could rise from around 3.8 % to 5.2 % by late 2025. 2. Surge in Domestic Consumption and Adjustment In response, Beijing has pivoted to stimulate internal demand. May retail sales rose by 6.4 % year‑on‑year—an uptick boosted by trade-in programmes and the “618” online shopping festival. State-led investments and subsidies are active, but analysts caution that real estate weakness, low consumer confidence, and slow investment (up just 3.7 %) could constrain sustainable growth.China is also accelerating its “dual circulation” strategy—reducing foreign reliance while expanding ties with ASEAN, the EU, and Belt and Road partners. 3. Currency Devaluation & Financial Pressure To offset trade headwinds, the Chinese yuan has been allowed to depreciate—falling to a post‑2007 low around 7.35 per dollar. Depreciation supports export competitiveness but triggers capital flight and heightened volatility. Hong Kong tech stocks, like Alibaba and Tencent, saw $120 billion wiped off in response to tightening and outflows of northbound funds. 4. Growth Cuts & Forecast Warnings Major financial institutions have downgraded their growth forecasts. Goldman Sachs now estimates China’s GDP at around 4 % in 2025 (down from 4.5 %), citing tariff impacts as a key drag. The EIU suggests a scenario where extended tariffs could reduce growth by 0.6 percentage points between 2025‑27, with deeper cuts if tariffs intensify. 5. Global Supply Chain Reconfiguration Multinationals are moving production out of China—28 % of electronics and 40 % of auto supply capacity have shifted to Vietnam, Malaysia, Mexico over the past year. This fragmentation of value chains reduces China’s export dominance, though rerouting creates its own complexity and cost pressure. Outlook – What Comes Next? China’s economic resilience has been reinforced through fiscal stimulus, retail consumption, and strategic pivoting to new markets. While domestic indicators show pockets of strength, the underlying structural damage—manufacturing decline, capital outflows, real estate fragility, and delayed investment—remain pressing concerns. For China to hit its 5 % GDP target in 2025, sustained governmental intervention and global market access are essential. The next 12 months will test how effectively China can leverage stimulus, trade diplomacy, and diversification to buffer against persistent tariff pressures. Overall, Trump’s tariff blitz has undeniably squeezed China’s export-driven economy, accelerated supply-chain shifts, and prompted monetary adjustments. But China’s policy toolkit—ranging from stimulus to strategic realignment—has provided some cushion. Still, longer-term growth risks loom unless bilateral trade stabilizes. .

Quality control (QC) is a process used to ensure that a product or service meets certain standards before it is shipped from a factory. In China, factories typically have a QC team in place to perform inspections at various stages of the production process.