China Posts Weakest Economic Growth in 3 Years

If even the official figures—which are often polished—appear grim, the reality must be very bad, an analyst says.

Visitors stand beside empty shelves in France's Galeries Lafayette mall a day before it closes, in Beijing on May 26, 2026. Greg Baker/AFP via Getty Images

China’s economic growth slowed to its weakest pace in three years last quarter, adding pressure on Beijing to introduce more stimulus to meet official targets.

Gross domestic product (GDP) grew by 4.3 percent year over year in the second quarter, according to National Statistics Bureau data released on Wednesday. It slowed sharply from a 5 percent expansion reported in the first quarter and fell short of a 4.5 percent gain forecast by economists polled by Reuters.

It represents the worst reading since the fourth quarter of 2022, when the country was still grappling with the draconian COVID-19 restrictions. It’s also below the full-year growth target of 4.5 percent to 5 percent, the lowest in more than three decades.

For some economic analysts, the latest figures add to indications that China’s economy is losing momentum.

“If even the official figures from the statistics bureau—which often polishes unfavorable data—appear grim, the real situation of the economy must be very bad,” David Huang, a U.S.-based analyst familiar with the Chinese economic situation, told The Epoch Times.

Attention is now turning to the upcoming Politburo meeting at the end of this month, where the Communist Party’s top officials will reveal whether they plan to deliver stimulus to keep the economic engine running.

“Without support, we’re likely to see growth continue to grind lower,” Lynn Song, chief economist for Greater China at ING Bank, said in a note on Wednesday.

Zhiwei Zhang, chief economist ​at Pinpoint Asset Management in Hong Kong, doubts the Politburo will signal a wider fiscal deficit, given that exports for now remain strong.

“There is a general consensus among policymakers and researchers that China needs to boost domestic demand,” he said. “But there is no consensus [on] how to do it.”

Employees working on the vacuum cleaner production line at a factory in Foshan, in southern Guangdong Province, China, on April 28, 2026. Pedro Pardo/AFP via Getty Images

Deepening Imbalance

Separate official Chinese data released on Wednesday show that retail sales, a measure of consumer spending, rose by 1 percent year over year in June, up from a 0.6 percent decline in May.

Industrial production grew by 5.3 percent from a year earlier, accelerating from a 4.5 percent increase recorded in May.

Exports have surged to a record high. Customs data released Tuesday showed shipments from the country beat expectations, jumping 27 percent in June from a year earlier in U.S. dollar value terms.

The European Union, for example, set an October deadline for Beijing to make progress on the widening trade gap and other unfair trade practices. Last year, the EU recorded the largest-ever trade deficit with China, amounting to 1 billion euros ($1.1 billion) per day.

Aerial view of domestic vehicles waiting to be loaded onto a ro-ro ship for export at Binhai New Area in Tianjin, China, on March 30, 2026. Lintao Zhang/Getty Images

European Commission President Ursula von der Leyen has signaled potential retaliation if Beijing fails to deliver tangible results by October.

“Dialogue is essential, but the dialogue has to deliver,” von der Leyen told reporters in Cork, Ireland, earlier this month. “We are basically prepared for everything, and we have all the instruments on the table.”

Slow Spending

In the first half of the year, fixed-asset investment, which measures long-term assets in everything from land and ports to rail, declined 5.7 percent from the same period last year. Investment in the property market recorded an 18 percent year-on-year drop.

​Andy Ji, an analyst at Shanghai-based ITC Markets, said the “​primary drag” on growth was the investment downturn.

“A high-tech-driven industrial engine running alongside cratering domestic consumption and investment firmly highlights the economy’s deeply uneven growth momentum,” Ji said.

Prominent Chinese economist Li Daokui raised concerns last week about the continued slump in fixed-asset investment, calling the contraction unprecedented. He also called attention to the high unemployment rate, especially among young people aged 16 to 24.

Li cautioned that if employment and investment were left unresolved, broader economic goals would face severe difficulties.

A woman browses in a mall in Beijing on July 15, 2026. Wang Zhao/AFP via Getty Images

Tens of millions of people have fallen out of formal employment into the gig economy, where they often work as ride-hailing or delivery drivers, facing long hours, low wages, and limited social security benefits.

Interviews of Chinese families and small business owners in recent weeks also painted a bleak picture. Several families said they’ve cut back on or delayed nonessential purchases due to uncertainty about jobs and wages in the wake of the property crisis that has eroded their wealth.

“It’s not that people don’t want to spend. They’re afraid to,” said Zhao—who asked to only use a surname—in Jinan, a provincial capital of Shandong, one of China’s wealthiest provinces.

“People used to assume their salary would keep coming every month,” Zhao told The Epoch Times last month. “Now, housing prices are falling, jobs feel less secure, and many families are supporting both children and elderly parents.

“People think twice before spending.”

Gu Xiaohua and Reuters contributed to this report.