China's Economic Growth Slows to 4.3%, Weakest Since Late 2022

China’s economy slowed sharply in the second quarter, with official data showing a 4.3% annual growth rate, the weakest in over three years. The figure fell short of expectations and was significantly lower than the 5% growth recorded in the January-March period. The slowdown occurred despite a surge in exports driven by the rapid development of artificial intelligence and strong global demand for Chinese-made electric vehicles. Beijing has also managed to cushion the economic impact of the Iran conflict, although rising global energy prices contributed to inflationary pressures. According to customs data, China’s exports jumped 17.6% in the first half of the year compared to the same period last year, with a 27% surge in June alone. However, domestic consumption and investment have lagged, limiting the positive spillover from the export sector. Economists note that China’s economy is becoming increasingly unbalanced, as state support and private investment concentrate on cutting-edge technologies such as AI, semiconductors, and robotics, while labour-intensive low-value manufacturing and the services sector fall behind. The country’s record global trade surplus of 1.2 trillion US dollars last year has sparked complaints from foreign policymakers about trade imbalances, with many attributing the surplus to government subsidies that have led to overcapacity in manufacturing. Meanwhile, the rapid advancement of AI and robotics is raising concerns about employment, with families cutting back on major purchases due to the prolonged property crisis and job uncertainty. Deputy Head of the National Bureau of Statistics Mao Shengyong acknowledged the serious imbalance between domestic supply and demand. He stated that China will continue to build a strong domestic market and support job stability as it focuses on high-tech manufacturing and higher-quality growth. BNP Paribas Securities’ Head of Multi-Asset Investment Wei Li described the situation as a significant economic transition. The IMF recently raised its 2024 growth forecast for China to 4.6%, but projects a slowdown to 4.1% by 2027.