China's Q2 2026 GDP growth slows to 4.3% amid weak domestic demand

China's economy expanded 4.3% year‑on‑year in the April‑June quarter of 2026, the slowest pace since late 2022 and below the government target of 4.5‑5%. Export activity remained strong, rising 17.6% in the first half of the year and surging 27% in June, driven by high‑tech products such as electric vehicles and semiconductors. By contrast, domestic demand showed little momentum: retail sales of consumer goods grew only 1.3% YoY, fixed‑asset investment fell 5.7%, and the housing market continued to decline.

The automotive sector highlighted the imbalance, with passenger‑vehicle sales dropping 20.2% in the first half of 2026, ICE sales falling 39% YoY in June and EV subsidies being cut. Industry profits narrowed to 3.4% and overall auto market consolidation is expected. China recorded a record trade surplus of about $1.2 trillion last year, prompting foreign‑policy concerns about overcapacity and subsidy‑driven exports. Officials reaffirmed the 2026 growth target of 4.5‑5% and noted the need to boost domestic consumption while managing deflationary pressures that have persisted for twelve quarters.