Key facts
- China's economy grew 4.3% year-on-year in the second quarter.
- This marks the slowest annual growth rate since the fourth quarter of 2022.
- Fixed-asset investment declined 5.7% in the first half of 2026.
- Property investment fell 18.0% in the first half of the year.
- Exports saw a significant increase, rising 17.6% in the first half.
- Retail sales showed improvement in June, growing 1.0%.
China's economy grew at a 4.3% annualized pace in the second quarter, the weakest performance in over three years and below analysts' expectations of 4.5%. This slowdown from the first quarter's 5.0% growth highlights a broad slump in domestic spending and investment, which is being compounded by a prolonged property downturn and the impact of an energy shock linked to geopolitical events.
Despite the domestic weakness, exports have shown resilience, rising 17.6% in the first half of the year and surging 27% in June, partly driven by strong global demand for Chinese electric vehicles and AI-related products. Industrial output also remained robust, accelerating to a 5.3% year-on-year increase in June.
However, fixed-asset investment declined 5.7% in the first half, with property investment falling sharply by 18.0%. New home prices continued to contract, though at a slightly slower pace. This divergence between strong industrial output and exports on one side, and weak consumption and investment on the other, suggests an increasingly unbalanced economic mix.
Analysts anticipate that policymakers will likely rely on fiscal measures rather than aggressive monetary easing to stabilize growth, with attention focused on comments from Premier Li regarding counter-cyclical adjustments.