China Q2 growth slows to 4.5%

China's economic growth likely slowed to 4.5% year-on-year in the second quarter of 2026, according to an AFP survey of analysts, down from 5% in the previous quarter but within the government's annual target of 4.5-5.0%. Strong exports driven by global AI demand and automobiles helped offset trade disruptions from the US-Israeli war on Iran, which choked shipping through the Strait of Hormuz. However, domestic demand remains weak, with retail sales falling for the first time in three years in May and a prolonged property sector debt crisis weighing on consumer confidence. Analysts expect new measures to support growth in the second half, especially if the AI export wave subsides. Trade frictions with the US and EU persist, with a US trade truce expiring in November and the EU considering protection measures.