China’s economy expanded by 4.3 per cent in the second quarter from a year earlier, the National Bureau of Statistics reported on Wednesday, undershooting the government’s 4.5–5 per cent target and marking the weakest quarterly performance since the final months of 2022. The slowdown, sharper than the 4.5 per cent forecast by economists, came despite a 27 per cent surge in exports in June, highlighting the growing divergence between external demand and a domestic economy weighed down by a prolonged property slump and cautious consumers.

Exports of semiconductors, electric vehicles and data-processing equipment have boomed, fuelled by global investment in artificial intelligence infrastructure. Yet that strength has not spilled over into the broader economy. Fixed-asset investment contracted by 5.7 per cent in the first half, with real estate investment plunging 18 per cent. Retail sales edged up 1 per cent in June after a decline in May, but spending on big-ticket items such as cars fell sharply. The result is an economy increasingly reliant on selling goods abroad while domestic engines of growth sputter.

In Beijing, the data will dominate a forthcoming Politburo meeting, where officials are expected to debate whether to accelerate fiscal spending or introduce new stimulus. Premier Li Qiang this week called for “additional policies” to be prepared, though the central bank has signalled no urgency to ease further. Analysts in Shanghai note that the official growth target was lowered in March precisely to give policymakers room to acknowledge structural weaknesses, and that the headline figure may partly reflect a greater willingness to report reality rather than a sudden collapse. From Washington, the IMF recently raised its 2026 forecast for China to 4.6 per cent but sees growth slowing to 4.1 per cent in 2027. European and American trade partners watch warily: China’s export machine, while a lifeline for its own economy, is deepening trade imbalances and fuelling protectionist pressures.

The immediate focus turns to the Politburo gathering later in July. Any signal of large-scale infrastructure spending or consumption vouchers would be closely parsed, but many economists expect only targeted measures. The longer the property sector remains in distress and household confidence stays low, the harder it will be for exports alone to sustain growth within the official range. The next milestone is the meeting’s readout, which will reveal whether Beijing opts for a more activist fiscal stance or continues to rely on gradual, sector-specific support.