China Q2 GDP growth slows to 4.3%

China's economy grew at its slowest pace in over three years in the second quarter of 2026, with GDP expanding 4.3% year-on-year, missing the 4.5% forecast and the government's 4.5-5% annual target. The slowdown was driven by weak domestic demand, a prolonged property downturn, and falling fixed-asset investment, despite a surge in exports fueled by the global AI boom. Exports rose 27% in June, led by semiconductors and data-processing equipment, while imports jumped 36% partly due to higher semiconductor prices. Retail sales grew 1% in June, beating expectations, and industrial output rose 5.3%. However, fixed-asset investment fell 5.7% in the first half, and property investment dropped 18%. The International Monetary Fund raised its 2026 growth forecast for China to 4.6% but expects further slowdown to 4.1% in 2027. Analysts noted the economy's growing imbalance between strong exports and weak domestic consumption, with policymakers unlikely to shift stance significantly at the upcoming Politburo meeting.