China's Economic Growth Slows to 4.3% in Second Quarter

China's economic growth decelerated to 4.3% in the second quarter of 2026 compared to the same period last year, marking the slowest pace since 2022 when the country was grappling with the economic fallout of the pandemic. In the first quarter, growth stood at 5%, bringing the first-half average to 4.7%.

The slowdown was driven by weak domestic demand and cuts in local government expenditures. Although Chinese exports surged 27% in June, largely fueled by strong demand in the artificial intelligence sector, this was insufficient to offset the weakness in domestic consumption.

Eswar Prasad, a China economy expert at Cornell University, noted that the overall slowdown reveals deep economic weaknesses that are suppressing domestic demand, making growth heavily reliant on exports. Additionally, a prolonged crisis in the real estate sector continues to weigh on the economy. The property market, once a key pillar of growth, is now in a downturn.

China's rising export volumes are also straining trade relations with partners, particularly the European Union, where fears persist that an influx of cheap Chinese goods could harm local businesses and industries.

In 2025, China's nominal GDP stood at $19.5 trillion, the second-largest globally after the United States. However, in purchasing power parity (PPP) terms, GDP reached $42 trillion, significantly surpassing the U.S. figure. A 5% annual growth rate translates to an increase of roughly $1 trillion in nominal terms and $2 trillion in PPP terms.