China’s economy expanded at a slower pace in the second quarter, as domestic demand remained weak and the drag from higher oil prices linked to the Iran conflict weighed on activity. Official GDP data show growth of 4.3% in Q2, missing Beijing’s 4.5%–5% target range set earlier this year. The quarterly report arrives days after separate data indicated a strong 27% year-on-year rise in June exports, underscoring the divergence between external demand and domestic momentum.
The government trimmed its annual target in March to a band of 4.5%–5%, its lowest since 1991, a decision analysts said could give authorities more policy flexibility amid a fragile domestic picture. The July release marks the first full quarter of GDP data since the start of the Iran war, which started on February 28, and follows a 5% expansion in the first quarter. Within the domestic portrait, the housing sector remained weak: new home prices fell again, with a 0.1% June decline, while consumer spending showed signs of stabilization as retail sales edged up 1% in June after a 0.6% drop in May.
Exports continued to support the external side of the economy, with a revival in technology shipments aided by robust demand for semiconductors powering AI data centres. The surge in car shipments, including electric vehicles, also contributed to a record-breaking month for vehicle exports, which topped one million units in June.
Analysts say the mixed data reflect an economy trying to rebalance away from debt-heavy investment toward consumption and high-tech industries, even as global demand conditions remain uncertain. The coming months will test policy transmission as Beijing weighs monetary easing against structural reform priorities.
