‘Imbalance remains acute’: China’s statistics chief admits growth problem

‘Given the increasingly unstable and uncertain global situation, the imbalance between strong supply and weak demand remains acute,’ Mao Shengyong, deputy head of China’s National Bureau of Statistics, told reporters on Wednesday, as the country released data confirming its economy had slowed to the weakest pace of growth in more than three years.

The economy expanded at an annualised 4.3% in the April-June quarter, down from 5% in the January-March quarter and below forecasts. The slowdown came despite continued strength in exports: customs data showed outbound shipments rose 17.6% in the first half of the year compared with the same period a year earlier, and climbed 27% in June alone, helped by the artificial intelligence boom and strong overseas demand for Chinese electric vehicles.

China has also largely avoided the broader economic fallout from the Iran war, even as higher energy prices added to inflationary pressures globally. But stronger overseas demand has not translated into a recovery at home, as consumer spending and investment remained weak, reducing the overall impact of export-led manufacturing on growth.

Economists say the economy is becoming increasingly uneven, with government support and private capital continuing to flow into advanced sectors such as artificial intelligence, robotics and semiconductor manufacturing, while lower-value manufacturing and service industries that generate large numbers of jobs continue to lag. The country’s high-tech manufacturing push has driven strong growth in exports of electric vehicles, computer chips and other electronic products, backed by significant government support.

Mao said China would continue pursuing ‘higher-quality economic growth’ through high-tech manufacturing, while also focusing on building a stronger domestic market and supporting stable employment. Household spending has remained under pressure as families continue to hold back on major purchases amid the prolonged downturn in the property market and uncertainty over wages and employment.

Wei Li, head of multi-asset investments at BNP Paribas Securities (China), said the economy is undergoing a ‘significant transition.’ Chinese leaders have set a growth target of between 4.5% and 5% for 2026, lower than last year’s 5%. The International Monetary Fund recently raised its forecast for China’s 2026 growth by 0.2 percentage points to 4.6%, while projecting growth will ease further to 4.1% in 2027.

Image credit: Wikimedia Commons/by Ermell