China's Economic Growth Slows to 4.3%, Weakest Since Late 2022
According to the government on Wednesday (15/07), China’s economy slowed sharply, with annual growth of 4.3% in the second quarter — the weakest figure in more than three years.
The official data came in below forecasts and was far lower than the 5% growth recorded in the January–March quarter. This came despite a surge in exports thanks to rapid developments in artificial intelligence (AI) and strong global demand for Chinese-made electric vehicles.
Beijing is also judged to have cushioned the economic impact of the Iran war, although a spike in energy prices has pushed up global inflation. According to customs data, China’s exports rose 17.6% in the first half of this year compared with the same period last year, and jumped 27% in June.
However, domestic consumption and investment remain sluggish, limiting the boost to the economy from the export sector.
China is overly focused on cutting-edge technology
A number of economists believe the Chinese economy is becoming increasingly unbalanced, as state support and private investment are concentrated in cutting-edge technology such as AI, semiconductors and robotics. Meanwhile, other sectors — such as low value-added manufacturing and the labour-intensive services industry — are being left behind.
Exports of high-tech products such as electric vehicles, semiconductors and other electronic equipment have risen sharply. The increase has been driven by substantial government support after Chinese leaders prioritised the development of advanced technology.
Last year, China recorded a global trade surplus of 1.2 trillion US dollars (approximately Rp21,688 trillion), the highest in its history. This has prompted complaints from policymakers in various countries about trade imbalances with the world’s second-largest economy. Many argue that large Chinese government subsidies have led to overproduction of manufactured goods, which are then exported to global markets.
Rapid AI and robotics development raises concerns
As in many other countries, the rapid development of AI and robotics has raised concerns about employment. The worrying question is whether businesses can create enough jobs.
Chinese households are also cutting back on big-ticket purchases. Their willingness to spend remains constrained by the prolonged crisis in the property sector, as well as uncertainty over jobs and wage levels.
Mao Shengyong, Deputy Head of China’s National Bureau of Statistics, said the imbalance between domestic supply and demand remains a serious problem, particularly amid an increasingly uncertain global situation.
China seeks to safeguard employment stability
He said China would continue to build a strong domestic market and provide support to maintain employment stability. This is being done as China focuses on high-tech manufacturing and efforts to promote “higher-quality economic growth”.
Wei Li, Head of Multi-Asset Investment at BNP Paribas Securities (China), said the Chinese economy is undergoing a “significant transition”.
For 2026, the Chinese government has set an economic growth target of 4.5–5%, lower than last year’s 5% target.
Meanwhile, the International Monetary Fund (IMF) recently raised its projection for China’s economic growth this year by 0.2 percentage points to 4.6%. Even so, the IMF expects Chinese growth to slow to 4.1% in 2027.