China growth likely slowed as weak demand offsets exports

China’s economy likely grew 4.5% in the second quarter, a step down from 5.0% in the first three months of 2026 as resilient exports failed to fully offset weak household spending and soft private investment. A poll of economists put growth below the 4.7% pace they had forecast in April, keeping the world’s second-largest economy near the lower end of Beijing’s official full-year target range of 4.5% to 5%.

The split between external demand and the domestic economy has become more visible in the data. Industrial output has been helped by AI-driven exports, but Goldman Sachs analysts said stronger shipments have not translated into better labor-market conditions or meaningful profit improvement. The property downturn, weak consumption and volatile global oil prices have continued to weigh on households and businesses, reinforcing a supply-demand imbalance that has been visible for months.

The latest official figures have added to that picture. The National Bureau of Statistics of China said June consumer prices rose just 1.0% from a year earlier, slower than May’s 1.2%, underscoring lingering disinflationary pressure. In the first quarter of 2026, gross domestic product expanded 5.0% year on year and 1.3% from the previous quarter, giving policymakers room to wait before launching major new support. The International Monetary Fund raised its 2026 China growth forecast to 4.6% in July, suggesting outside institutions still expect expansion, but not enough to call the economy broadly healthy.

Investors are watching a late-July Politburo meeting for clues on whether Beijing will add more stimulus. Analysts do not expect aggressive action unless growth slows more sharply, in part because exports have remained resilient and officials are still focused on curbing excess factory capacity and fighting deflation. That caution leaves policymakers balancing a weaker home market against a still-functional export engine.

The next reading will come with the July release from the National Bureau of Statistics, which is set to include second-quarter GDP, retail sales, industrial production and investment data. The bureau’s regular calendar puts quarterly national economy data out in January, April, July and October, along with monthly industrial output, retail sales, fixed-asset investment and real-estate development figures in those months. The figures will show whether China’s second-quarter slowdown was mild, as economists expect, or whether weak domestic demand cut deeper than the current forecasts suggest.