15th July 2026: Q2 GDP Performance

RUI: China recorded GDP growth of 4.3 per cent year-on-year during the second quarter of 2026, according to data published by the National Bureau of Statistics—or NBS—on 15^th July. This represents a slowdown compared the first quarter, during which GDP grew at 5 per cent. Higher fossil fuel prices and ongoing challenges, such as subdued consumer confidence and the downturn of China’s property sector, have all weighed on growth.

XINHE: Despite this slowdown, China remains on track to achieve its 2026 GDP growth target—as set out at the Two Sessions—of 4.5 to 5 per cent, having registered 4.7 per cent GDP growth during the first half of the year. The country is also currently outperforming the expectations of both the International Monetary Fund and the World Bank which projected it to achieve a growth of 4.6 per cent and 4.4 per cent respectively during the full year.

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RUI: Data released by the NBS on 15^th July shows that industrial production in China grew by 5.3 per cent year-on-year in June, up 0.8 percentage points on the 4.5 per cent growth registered in May.

XINHE: Retail sales grew more slowly over the same period, with supply growth continuing to outpace demand growth. A 1 per cent year-on-year increase in retail sales was recorded, a sharp decrease on 4.8 per cent growth in retail sales registered in June 2025.

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RUI: China exported 412.3 billion US dollars’ worth of goods to the rest of the world in June 2026, a year-on-year increase of 27 per cent, according to data published by China’s General Administration of Customs. The total value of goods imported to the country from the rest of the world grew by 36 per cent over the same timeframe, to stand at 286.7 billion US dollars.

XINHE: China Customs’ data also shows that the country’s trade surplus with the EU widened in June to 32.87 billion US dollars, up 7.2 per cent from the 30.66 billion US dollar surplus recorded in May.

The EU’s growing trade deficit with China has become a significant point of contention in Brussels and many EU Member State capitals. During bilateral talks last month, European Commissioner for Trade and Economic Security and Interinstitutional Relations and Transparency Maros Šefčovič warned his counterpart, Chinese Minister of Commerce Wang Wengtao, that the current situation is ‘not sustainable’.

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RUI: According to data published by the NBS, producer price inflation in China hit a four year high in June after factory gate prices increased 4.1 per cent year-on-year. This was predominantly driven by cost-push inflation, rather than rising demand, as rising input costs—including for oil, gas, chemical materials, and non-ferrous metals—continued to put pressure on producers’ margins.

XINHE: China’s consumer price index registered 1 per cent y-o-y growth during the sixth month of the year, a slight decrease on the 1.2 per cent growth rate recorded in May.

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RUI: On 13^th July, the State Council released the 15^th Five-year Plan for Boosting Consumption, which calls for increased service-related and goods consumption; and sets a target of growing retail sales of consumer goods in China to around 60 trillion Chinese yuan by 2030.

The plan also outlines the need to increase household spending power by boosting employment rates, ensuring steady income growth, and by developing a more comprehensive social security system.

XINHE: The document—which is China’s first dedicated five-year plan specifically to boosting consumption—is a positive signal. The European Chamber has long highlighted the need for policies aimed at boosting domestic consumption to be more structural in nature—such as by improving the social safety net—as opposed to those that tend to provide temporary relief, such as trade-in subsidy programmes. While boosting domestic consumption is important, it will also be crucial to ensure that it is balanced against manufacturing output, to avoid further fuelling tensions with many key trading partners—including the EU—whose economies have come under increasing pressure from the rapid growth of Chinese exports.

(MUSIC)

RUI: From 2^nd to 7^th July, Chinese Foreign Minister Wang Yi visited northern Europe for a series of state visits, which included meetings with Danish Foreign Minister; Swedish Prime Minister and Foreign Minister; Finnish President and Foreign Minister; and Norwegian Prime Minister and Foreign Minister.

Topics discussed included strengthening bilateral trade and investment, rebuilding mutual trust, the green economy and artificial intelligence.

XINHE: Against a backdrop of escalating EU-China trade and investment tensions, it is positive that there has been increased engagement between European and Chinese officials at different levels in recent months. At the same time, with the EU now more assertively looking to rebalance its trade and investment relations with China, there is an increasing need for such talks to lead to tangible outcomes on key European concerns.

(MUSIC)

XINHE: Thanks for listening, and don’t forget to tune in again next week.

RUI: In the meantime, please find useful links in the episode notes.

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