China's Q2 GDP grew 5.2% year-on-year, matching market expectations. However, June economic indicators revealed five puzzling anomalies beneath the surface. Retail sales expanded 4.8% YoY (below 5.6% consensus), fixed-asset investment rose 2.8% cumulatively (underperforming 3.7% forecast), while industrial output surged 6.8% (exceeding 5.5% expectations).

GDP Paradox: Strong exports and industrial production contrasted with tepid construction activity. While Q2 industrial value-added dipped marginally to 6.3% from Q1's 6.5%, the secondary sector plummeted to 4.8% from 5.9% due to construction weakness. Additionally, export price rebounds inflated nominal trade data, causing net exports' contribution to GDP to shrink 0.9 percentage points.

Retail Enigma: E-commerce calendar shifts distorted consumption patterns. Major shopping festivals moved from June to mid-May, causing unusual fluctuations. Month-over-month growth for major retailers averaged 11.5% in May versus 10.5% in June - reversing the historical 8.4% (May) and 17.3% (June) pattern. Appliance and electronics sales plunged 20.6pp and 19.1pp respectively. Catering revenue collapsed 5.0pp to 0.9% as platform subsidies artificially suppressed reported figures through post-coupon accounting.

Investment Conundrum: June FAI growth hit a three-year low at 0% monthly growth. Construction/installation investment fell 3.5pp while land acquisition costs dropped 4.5pp. Though equipment purchases rose 2.5pp, infrastructure (down 4.6pp to 5.2%), manufacturing and service investments weakened substantially. Companies prioritized equipment upgrades over factory expansions and major projects.

Property Disconnect: Despite developer financing improving 6.8pp to -2.3% and new construction starts rebounding, property investment slid 0.9pp to -12.9%. Shrinking project pipelines from earlier construction slumps continue dragging investment, with sales declining further (-5.5% by area, -10.8% by value).

Industrial Surprise: Manufacturing output benefited from three extra working days and export front-loading. Textile production rose 1.9pp while chemicals gained 1.6pp, offsetting weakness in autos and steel.

Outlook: Front-loaded demand and fiscal stimulus created H1 growth anomalies that may reverse in H2. The economy's structural adjustment since 2022 nears completion, with property indicators showing nascent bottoming signals. Policy support could emerge by late Q3, while services - consumption, investment, and exports - remain key growth drivers.

Additional indicators: Services output moderated to 6.0% in June. Equipment manufacturing investment weakened significantly, with non-ferrous metal processing down 10.5pp. Urban unemployment held at 5.0%, though migrant workers saw improved conditions.