China Economy Grows 4.3% in Q2, Slowest Pace in Over Three Years

China's economy expanded at a 4.3% annualized pace in the April-June quarter, the government reported Wednesday, marking the slowest quarterly growth in more than three years. The figure fell short of forecasts and trailed the 5% pace recorded in January-March. Overall growth for the first half of 2026 reached 4.7%, within the government's full-year target range of 4.5% to 5%.

Exports provided the main support. Customs data showed shipments abroad rose 17.6% in the first half compared with a year earlier and jumped 27% in June alone, aided by global demand for electric vehicles and other high-tech goods. Domestic indicators pointed to persistent weakness.

Fixed-asset investment fell 5.7% year-on-year in the first half, while retail sales of consumer goods rose just 1.3%. Industrial output by value increased 5.4% over the same period. Mao Shengyong, deputy head of the National Bureau of Statistics, told reporters that the imbalance between strong supply and weak demand remains acute.

He said authorities will focus on building a robust domestic market and stabilizing employment. Lynn Song, chief economist for Greater China at ING Bank, noted that the second-quarter reading was the slowest since the lockdown-affected fourth quarter of 2022.

Eswar Prasad of Cornell University said China's growth model has become increasingly imbalanced, with heavy state support directed toward frontier technologies while other sectors lag.

The International Monetary Fund recently raised its 2026 China growth forecast by 0.2 percentage points to 4.6% and projects 4.1% expansion in 2027. Wei Li of BNP Paribas Securities described the economy as undergoing a significant transition.