China economy slows to 3-year low of 4.7% in Q2
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China's economy grew 4.7% in the second quarter of 2026, the slowest pace in three years, according to data from the National Bureau of Statistics. The reading missed the 5.1% forecast by analysts polled by Reuters. Industrial output rose 5.3% in June, down from 5.6% in May, while retail sales growth slowed to 2.0%.
Growth Drivers
The slowdown was driven by a sharp decline in real estate investment, which fell 10.1% year-on-year in the first half of 2026. Manufacturing investment grew 9.5%, but that was not enough to offset the property slump. Exports rose 8.6% in June, providing some support, though trade tensions with the European Union and the United States remain elevated.
Policy Response
The People's Bank of China has kept its one-year loan prime rate at 3.45% since October 2025, resisting pressure to cut further. The central bank injected 200 billion yuan ($27.6 billion) into the banking system via medium-term lending facility on July 15. Analysts at Goldman Sachs expect a 10-basis-point rate cut in the third quarter if growth continues to weaken.
What's Next
The Chinese government is set to release July trade data on August 7, which will offer clues on external demand. It remains unclear whether Beijing will introduce additional fiscal stimulus beyond the 1 trillion yuan in special bonds already planned for 2026.
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China economy slows to 3-year low of 4.7% in Q2
