China's economic growth slowed sharply in the second quarter, falling to 4.3% from 5% in the first quarter, according to official gross domestic product (GDP) figures released Wednesday. The expansion, measured from April to June, missed Beijing's annual target range of 4.5% to 5% and marked the weakest quarterly performance since late 2022, when the country was emerging from strict Covid-19 restrictions.
The slowdown comes despite a 27% surge in exports in June, driven by strong global demand for semiconductors and electric vehicles. However, domestic headwinds—including a prolonged property market slump and weak consumer spending—weighed on growth. New home prices fell 0.1% in June, while retail sales rose a modest 1% after a 0.6% decline in May.
Analysts pointed to the Iran war's impact on oil prices as an additional strain, but some suggested the lower growth target, set in March, may have allowed Beijing to more accurately reflect pre-existing economic weaknesses. Julian Evans-Pritchard, head of China economics at Capital Economics, noted that the official figure now aligns closely with independent estimates, indicating "a greater willingness to acknowledge pre-existing weakness rather than a sudden deterioration."
China's National Bureau of Statistics cited "external instability and uncertainty" and an imbalance between strong supply and weak domestic demand as key challenges.
Despite the slowdown, June data showed some improvement in consumer activity, and exports to the AI sector and electric vehicles remained robust.