Politics
China’s economy slows, hits weakest quarterly growth in three years
China’s economy slowed sharply to an annualized growth rate of 4.3% in the April-June quarter, the government announced on Wednesday, the weakest in more than three years.
Official data fell short of forecasts and was well below forecasts for the economy. strong 5% growth in January-March, despite an increase in exports driven in part by the rise of artificial intelligence and strong global demand for Chinese products. electric vehicles.
China has largely ignored the broader economic impacts of the war in Iran, as soaring energy prices have driven up global inflation. Exports increased by 17.6% in the first half of the year compared to the previous year, and 27% in Juneaccording to customs data.
But domestic spending and investment lagged, limiting the boom in manufacturing exports for an economy that has struggled to regain momentum since parts of China were locked down during the COVID-19 pandemic.
“This is the slowest growth on record since the lockdown-impacted fourth quarter of 2022,” Lynn Song, chief economist for Greater China at ING bank, said in a note.
Some economists say China’s economy is becoming increasingly unbalanced as massive state support and private investment flow to the borders. technologies like AI, computer chips And robotics while other areas, such as low value-added manufacturing and job-creating service industries, are stagnating.
Exports of high-tech products such as electric vehicles, computer chips and other electronic equipment, have grown sharply, helped by significant government support since Chinese leaders made the development of advanced technologies a top priority.
China ran towards Record global trade surplus of $1.2 trillion last year, sparking complaints from policymakers in other countries about their trade imbalances with the world’s second-largest economy. Many have pointed to these heavy government subsidies, which they say contribute to an oversupply of manufactured goods that end up being exported abroad. Industrial production in value increased by 5.4% in the first half of the year compared to the previous year.
As is the case in many countries, the expansion of AI and robotics has also raised domestic concerns about the ability of businesses to create enough jobs to support long-term growth.
Chinese families have reduce on large purchases, their appetite for spending constrained by a prolonged real estate crisis and uncertainties over employment and wages.
While China remains dependent on its exports to support its overall growth, “China’s growth model has become increasingly unbalanced,” said Eswar Prasad, professor of economics and trade policy at Cornell University. It will be difficult to significantly increase domestic demand as confidence remains low, he added.
Mao Shengyong, deputy director of China’s National Bureau of Statistics, told reporters that given the increasingly unstable and uncertain global situation, the imbalance between strong supply and weak demand “remains acute” in the country.
As China focuses on high-tech manufacturing and pursues “higher-quality economic growth”, it will strive to build a robust domestic market and provide support to maintain employment stability, he said.
Underscoring weak spots in the economy, investment in fixed assets, such as industrial equipment, fell 5.7% year-on-year in the first half, while retail sales of consumer goods rose only 1.3%. Housing prices continued to fall.
China’s economy is going through a “significant transition”, said Wei Li, head of multi-asset investments at BNP Paribas Securities (China).
For the whole of 2026, Chinese leaders have set a growth target of 4.5% to 5%slower than last year’s 5%. Overall economic growth for the first half of the year was 4.7%, according to data released Wednesday.
The International Monetary Fund recently raised its forecasts for China’s annual growth by 0.2 percentage points to 4.6%. China’s economy is expected to grow by just 4.1% in 2027.
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Sources 2/ https://fortune.com/2026/07/15/china-economy-slowest-growth-three-years-quarterly/ The mention sources can contact us to remove/changing this article |
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