China’s Economy Expands at Its Slowest Rate in More Than Three Years During Q2
China’s economy lost momentum in the second quarter, recording its weakest growth rate in more than three years as sluggish consumer spending outweighed the resilience of manufacturing activity and exports. The latest data has reignited concerns over the sustainability of the country’s growth model, which remains heavily reliant on investment and external demand.
Gross domestic product expanded by 4.3% year-on-year in the April–June period, slowing from 5.0% growth in the first quarter and falling below Beijing’s annual growth target range of 4.5%–5.0%.
The softer growth figures are likely to increase pressure on policymakers to introduce additional support measures for the economy. However, expectations for large-scale stimulus remain limited, as authorities continue to balance growth objectives against concerns about rising debt risks.
Other economic indicators delivered a mixed signal. Retail sales rebounded by 1.0% in June after a 0.6% decline in May, suggesting a modest improvement in consumer activity. Meanwhile, industrial production accelerated to 5.3% from 4.5%, highlighting the continued strength of the manufacturing sector.
The contrast between weak domestic demand and solid industrial output underscores China’s ongoing dependence on overseas markets to sustain economic growth. This reliance comes at a time when global trade tensions remain elevated and geopolitical uncertainties continue to weigh on the broader economic outlook.
Recent trade data reinforced the importance of external demand, with exports surging 27% year-on-year in June, up sharply from 19.4% in May and significantly exceeding market expectations. The strong export performance also contributed to a wider trade surplus.
Much of the export strength was driven by continued robust demand for technology- and artificial intelligence-related products, further cementing the sector’s role as a key pillar of China’s economic expansion amid persistent weakness in consumer spending and the property market.
