China’s second‑quarter gross domestic product grew 4.3%, falling below the 4.5‑5% growth floor set by Beijing, and the lowest expansion rate since the end of 2022.
The figure comes after a 5% rise in Q1 and a global backdrop that saw oil prices climb following the escalation of the Iran conflict. That spike hit domestic fuel costs and hampered manufacturing costs throughout the country.
Despite the slowdown, China’s exports jumped 27% in June against a year‑earlier baseline, driven by soaring demand for semiconductors and electric vehicles (EVs). Monthly car exports topped one million units for the first time, buoying the export sector.
On the domestic front, the property market remains weak. New home prices contracted again last month, though the 0.1% drop in June was slower than May. Retail sales, meanwhile, rebounded to a 1% rise, easing a 0.6% decline seen in May.
Market analysts suggest the modest growth reflects a deliberate easing of the growth target rather than a sudden deterioration. “The authorities are now more willing to acknowledge pre‑existing weakness,” said Julian Evans‑Pritchard of Capital Economics, noting that the data align closer with his own forecasts.
Fabien Yip of IG highlighted that Chinese firms are swimming through higher energy and raw‑material costs, but domestic demand remains too weak to offset them. He warned that prolonged conflict in the Middle East could further tighten the situation for the economy.
The National Bureau of Statistics labelled the slowdown an outcome of “external instability and uncertainty” and noted a disequilibrium between supply strength and demand weakness. As Beijing navigates these challenges, the focus may shift to stabilising domestic demand while leveraging export momentum driven by AI and EV needs.
Image source: VCG via Getty Images
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