Despite this slowdown, China recorded an industrial and commercial improvement in June, driven by the rise of AI and automobiles.
China saw its economic growth slow more sharply than expected in the second quarter of 2026, reaching its lowest level since 2022, according to figures published Wednesday July 15 by the National Bureau of Statistics (NBS). The gross domestic product (GDP) of the world’s second largest economy grew by 4.3% over one year in April-June 2026, below the forecast of 4.5% from a panel of economists surveyed by AFP. This is the lowest quarterly growth since the last quarter of 2022, marking a clear slowdown after growth of 5% in the first quarter of 2026. Over the first half of the year, GDP increased by 4.7% year-on-year.
A marked slowdown despite dynamic exports
China, which has made exports a pillar of its economic model, essentially depends on foreign trade for its growth. This slowdown comes as the country faces a prolonged slump in its real estate sector and still weak domestic consumption. Tensions linked to the conflict between the United States and Iran have also threatened Chinese economic dynamics by hampering maritime traffic in the Strait of Hormuz and causing oil prices to soar.
The National Bureau of Statistics pointed out that “there are many unstable and uncertain external factors, and the domestic imbalance between abundant supply and weak demand persists.” “The foundations for economic recovery must still be consolidated,” he concluded.
Despite this difficult context, several indicators published in June demonstrate an unexpected improvement in the economy. China’s industrial production rose 5.3% year-on-year in June 2026, accelerating more sharply than expected after a 4.5% rise in May. Retail sales, a barometer of consumption, rebounded in June (+1% year-on-year), after a drop of 0.6% the previous month, the first in more than three years.
China’s dollar-denominated exports soared 27% year-on-year in June 2026, far exceeding analysts’ expectations. This performance is driven by the global boom in artificial intelligence and automobiles. Imports also rose 36% year-on-year in June, their biggest increase in five years. In detail, exports (in dollar value) of semiconductors soared by 122% over one year, even if the volume of semiconductor exports fell slightly over one year, its first decline in more than two years. The number of vehicles exported increased by 72% year-on-year in June, boosted by electric vehicles, and China exported more than a million cars in the month of June alone.
Despite these positive signals, the economic situation remains fragile. Investment in fixed capital fell by 5.7% year-on-year in the first half of 2026, a decline well above the 4.9% expected, after a drop of 4.1% over January-May. Real estate investment collapsed by 18% over the half-year.
Yue Su, analyst at The Economist Intelligence Unit, observes that “domestic demand remains the weak link: in June, oil imports remained at a historically low level compared to the previous year, while downstream industries, such as chemicals, continue to record weak growth.” She adds: “It will take time for industrial supply chains and energy demand”, disrupted by the war in the Middle East, “to return to normal”, while “the growth of Chinese household income continues to be lower than that of GDP”, which “weighs on consumer confidence”. According to her, “the authorities will place more emphasis on stimulating consumption in the second half of the year and until the beginning of 2027”.
Beijing has set itself the objective of annual growth of 4.5 to 5%. China’s 15th Five-Year Plan (2026-2030) emphasizes productive power, economic sovereignty and dominance of key technologies, while keeping rebalancing toward the domestic market as a secondary priority.
