Analyst
Analyst
2Q26 Growth Slows To 4.3% yoy; June Data Mixed
- China's 2Q26 real GDP growth slowed to 4.3% yoy (-0.7ppt qoq), bringing 1H26 growth to 4.7% yoy. Quarterly FAI contracted 9.7% yoy while quarterly retail sales growth slowed to 0.2% yoy, both marking sharp reversals from 1Q26.
- June data was mixed: Industrial production growth rose to 5.3% yoy (+0.8ppt mom) and retail sales rebounded to 1.0% yoy, both beating consensus. However, FAI ytd growth fell further to -5.7% yoy (-1.6ppt mom), dragged by property FAI ytd (-18.0% yoy) as the decline deepened. The unemployment rate improved to 5.0% (-0.1ppt mom).
- With the government focused on accelerated project implementation rather than increasing fiscal impulse, further support is likely to remain targeted; attention turns to the July Politburo meeting. We keep our 2026 real GDP forecast unchanged at 4.2% yoy, cut FAI growth forecast to 2.0% yoy, compensated by stronger export/import growth of 10.0%/11.0% yoy respectively.
What’s New
- China's 2Q26 real GDP growth slowed to 4.3% yoy, down from 1Q26's 5.0% yoy and below 2Q25's 5.4% yoy, bringing 1H26 growth to 4.7% yoy. By industry, the tertiary sector posted a 5.2% yoy (flat qoq) growth, while the secondary sector grew 3.9% yoy (-1.0ppt qoq) and the primary sector rose 3.7% yoy (-0.1ppt qoq), with the secondary sector accounting for most of the slowdown. The deceleration reverses the stabilisation seen in 1Q26, with quarterly FAI contracting 9.7% yoy and quarterly retail sales growth slowing to 0.2% yoy, both sharp reversals from 1Q26's 1.7% yoy and 2.4% yoy respectively.
2Q26 Growth Slows To 4.3% yoy; June Data Mixed
- China's 2Q26 real GDP growth slowed to 4.3% yoy (-0.7ppt qoq), bringing 1H26 growth to 4.7% yoy. Quarterly FAI contracted 9.7% yoy while quarterly retail sales growth slowed to 0.2% yoy, both marking sharp reversals from 1Q26.
- June data was mixed: Industrial production growth rose to 5.3% yoy (+0.8ppt mom) and retail sales rebounded to 1.0% yoy, both beating consensus. However, FAI ytd growth fell further to -5.7% yoy (-1.6ppt mom), dragged by property FAI ytd (-18.0% yoy) as the decline deepened. The unemployment rate improved to 5.0% (-0.1ppt mom).
- With the government focused on accelerated project implementation rather than increasing fiscal impulse, further support is likely to remain targeted; attention turns to the July Politburo meeting. We keep our 2026 real GDP forecast unchanged at 4.2% yoy, cut FAI growth forecast to 2.0% yoy, compensated by stronger export/import growth of 10.0%/11.0% yoy respectively.
What’s New
- China's 2Q26 real GDP growth slowed to 4.3% yoy, down from 1Q26's 5.0% yoy and below 2Q25's 5.4% yoy, bringing 1H26 growth to 4.7% yoy. By industry, the tertiary sector posted a 5.2% yoy (flat qoq) growth, while the secondary sector grew 3.9% yoy (-1.0ppt qoq) and the primary sector rose 3.7% yoy (-0.1ppt qoq), with the secondary sector accounting for most of the slowdown. The deceleration reverses the stabilisation seen in 1Q26, with quarterly FAI contracting 9.7% yoy and quarterly retail sales growth slowing to 0.2% yoy, both sharp reversals from 1Q26's 1.7% yoy and 2.4% yoy respectively.
Analyst
Analyst
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