China’s economy slows to 4.3 per cent in the second quarter, below expectations

The Chinese economy slowed in the second quarter of 2026, growing by 4.3 per cent year-on-year, compared with the +5 per cent recorded in the first three months of the year and below market expectations, which had pointed to growth of 4.5 per cent. This was announced by China’s National Bureau of Statistics (NBS).

This is the weakest annual growth rate since the fourth quarter of 2022. The slowdown reflects weak domestic demand, cautious private investment and the prolonged crisis in the property sector, factors which have weighed on economic activity despite support from exports linked to the artificial intelligence sectors.

The figure highlights the difficulties faced by the world’s second-largest economy in maintaining a sustained pace of growth, whilst Beijing continues to focus on boosting domestic consumption and industrial transformation through new technologies. This slowdown comes at a time when the Chinese government has stepped up measures to support the economy, but households remain cautious about spending and the property sector continues to be one of the main areas of weakness.

Whilst the overall figures for the Chinese economy are stagnating, industrial production picked up pace in June 2026, growing by 5.3 per cent year-on-year, compared with the 4.5 per cent recorded in May. The figure exceeded analysts’ forecasts, which stood at +4.6%, according to a statement from China’s National Bureau of Statistics (NBS). This is the fastest rate of growth since last March, driven mainly by the manufacturing sector, where output rose by 6 per cent, compared with +4.4 per cent in May.

Growth in the production and supply of electricity, heat, gas and water was more moderate, rising by 7.4 per cent compared with the previous figure of +7.6 per cent. The mining sector declined, contracting by 2.2 per cent following a +2.3 per cent increase in May. Within the manufacturing sector, 29 of the 41 main industrial sectors recorded growth. Among the most dynamic sectors were computers and communications equipment (+15.7 per cent), railway and shipbuilding (+18.2 per cent), general machinery (+9.9%), specialised equipment (+10%), electrical machinery (+7%) and the automotive sector (+8.7%). The agri-food sector (+3.1%), textiles (+3.4%) and the oil and gas sector (+1%) also grew. By contrast, the chemical sector (-0.1%), coal mining and processing (-5.9%) and non-metallic mineral products (-3.8%) recorded a decline. Overall, in the first six months of 2026, Chinese industrial production rose by 5.4 per cent. On a month-on-month basis, the increase in June was 0.76 per cent, according to data from the NBS.