China's economy grows 4.3% in Q2, slowest since late 2022

China's economy grew at a 4.3% annualized pace in the April-June quarter, the slowest since late 2022 and well below the 5% growth in the first quarter. The official data missed forecasts of 4.5% growth, highlighting persistent domestic weaknesses despite a surge in exports Source: AP News, CNN.

The divergence

Exports jumped 27% in June from a year earlier, driven by AI-related semiconductor demand and robust global appetite for Chinese electric vehicles Source: AP News. However, domestic spending remains sluggish. Retail sales rose only 1% in June, rebounding from a decline in May, while investment in fixed assets fell 5.7% in the first half Source: NPR.

• Export strength: Exports rose 17.6% in the first half of 2026, with a record $1.2 trillion trade surplus last year, drawing complaints from trading partners Source: Euronews.
• Weak consumption: Chinese families are cutting back due to a prolonged property slump and job uncertainty Source: AP News.

The war in Iran has added complexity: higher energy costs have lifted import prices but also pose risks to global supply chains Source: CNN.

Outlook

China has set a 4.5%-5% growth target for 2026. The IMF raised its forecast to 4.6% but expects growth to slow to 4.1% in 2027 Source: AP News. Some economists describe the economy as increasingly "imbalanced," with heavy investment in high-tech sectors while other industries languish Source: NPR.