China's Economy Grows 4.3% in Q2, Slowest Pace Since 2022 Despite AI Export Boom

Beijing | EcoPulse24

China's economy expanded 4.3% year-on-year in the second quarter of 2026, slowing from 5.0% in the previous quarter and falling short of market expectations, as persistent weakness in domestic demand outweighed another quarter of record export performance.

Data released by China's National Bureau of Statistics (NBS) showed the economy recorded its slowest annual growth since the fourth quarter of 2022, underscoring the uneven nature of the country's recovery.

The reading also slipped below the lower bound of Beijing's annual growth target range of 4.5% to 5.0%, increasing expectations that policymakers could introduce additional stimulus measures in the coming months.

Domestic Weakness Offsets Export Strength

The softer GDP growth comes despite exceptionally strong trade performance during June.

China's exports surged to a record US$412.4 billion, supported by robust global demand for AI-related technology products and higher semiconductor prices.

Imports also climbed to an all-time high of US$286.8 billion, producing one of the country's largest monthly trade surpluses on record.

However, strong external demand continued to mask structural challenges inside the domestic economy.

Weak household consumption, subdued private investment and the prolonged downturn in the property sector remained the principal drags on overall economic growth during the quarter.

Officials Highlight Economic Resilience

Despite the slowdown, Chinese officials maintained an optimistic assessment of economic conditions.

Mao Shengyong, Deputy Commissioner of the National Bureau of Statistics, said the economy remained "within an appropriate range," citing stable employment, modest inflation and resilient foreign trade.

He added that industrial production and corporate profits accelerated during the quarter, led by high-tech manufacturing and equipment production, while the services sector continued to expand.

For the first six months of 2026, China's economy grew 4.7% compared with the same period last year.

China Q2 GDP Snapshot

EcoPulse24 Analysis

China's second-quarter GDP report highlights a widening divergence between the country's export sector and its domestic economy.

On one hand, manufacturers continue to benefit from robust global demand for AI hardware, semiconductors and advanced technology products, helping exports reach unprecedented levels.

On the other hand, domestic consumption has yet to recover convincingly. Weak consumer confidence, cautious private investment and the prolonged correction in the property market continue to restrain broader economic activity.

The data reinforce expectations that Beijing may introduce further fiscal or monetary support, particularly if policymakers seek to return growth toward the government's target range during the second half of the year.

For global markets, the report carries mixed implications. Continued strength in Chinese exports supports international manufacturing supply chains and technology demand, while weaker domestic growth could weigh on commodity consumption and reinforce calls for additional policy easing.

Ultimately, the latest figures suggest that China's economy remains increasingly dependent on external demand, with the AI-driven export boom providing an important buffer against persistent weakness at home.