Key facts
- China's Q2 GDP grew 4.3%, missing the government's annual target.
- Exports increased by 27% in June, driven by global demand for semiconductors and electric vehicles.
- New home prices contracted by 0.1% in June, though the decline slightly eased.
- Retail sales rose by 1% in June, showing improvement after a prior decrease.
- Fixed-asset investment shrank 5.7% in the first six months of 2026.
China's economic growth slowed sharply in the second quarter to 4.3%, falling short of the government's annual target. This slowdown occurred despite a significant 27% jump in exports in June, driven by strong global demand for semiconductors and electric vehicles. Weak domestic demand and a prolonged property market slump continue to challenge Beijing's economic management. While new home prices contracted by 0.1% in June, the pace of decline slightly eased from the prior month. Retail sales showed improvement, rising 1% in June after a decrease in May. Industrial output rose 5.3% in June, but fixed-asset investment shrank 5.7% in the first six months of 2026. Analysts note that China's reduced annual growth target of 4.5%-5% provides officials with greater flexibility. The latest GDP figures are the first full quarterly data released since the start of the Iran war in February, following a 5% rise in the first quarter.