Key facts
- China's Q2 GDP grew 4.3% year-on-year, the slowest pace since Q4 2022.
- The growth rate fell short of the government's target of 4.5% to 5%.
- Exports surged 27% in June, contrasting with weak domestic demand.
- Fixed-asset investment declined 5.7% in the first half of the year.
- Retail sales of consumer goods climbed 1.3% in the first half.
- Overall economic growth for the first half of the year was 4.7%.
China's economy grew at its slowest pace in over three years in the second quarter, with GDP expanding 4.3% year-on-year, according to government data. This figure fell short of forecasts and the government's target range of 4.5% to 5% for the full year.
The slowdown was primarily driven by weak domestic demand, including a significant slump in investment and a meager rise in retail sales. Fixed-asset investment declined 5.7% in the first half of the year, while retail sales of consumer goods climbed only 1.3% during the same period. Housing prices also continued to fall.
In contrast, exports showed robust growth, rising 17.6% in the first half and surging 27% in June. This export strength, particularly in high-tech products like electric vehicles and computer chips, has been a key driver for an economy struggling to regain momentum since pandemic-related lockdowns.
Economists note that China's growth model is becoming increasingly imbalanced, with heavy state support and investment flowing into advanced technologies like AI and robotics, while other sectors lag. This has led to concerns about job creation and the sustainability of growth in the longer term, especially as Chinese families cut back on major purchases due to property market uncertainties and concerns over jobs and wages.
Officials acknowledged the imbalance between strong supply and weak demand remains acute. China aims to build a robust domestic market and support employment as it pursues higher-quality economic growth.