China's economy grew at a 4.3% annual pace in the 2nd quarter, slowest since late 2022

China's economy grew at a 4.3% annual pace in the second quarter, the slowest since late 2022, missing forecasts and down from 5% in the first quarter. Exports surged 17.6% in the first half, driven by AI and electric vehicles, but domestic spending and investment lagged amid a property slump and weak consumer confidence.

HONG KONG AP — China's economy slowed sharply to a 4.3% annualized pace of growth in the April-June quarter, the government said Wednesday, the weakest in over three years. The official data fell short of forecasts and was far below the economy's strong 5% https://apnews.com/article/china-economy-data-growth-e1dbb6d542c6c1b17f99671f4dcc7d81 pace of growth in January-March, despite a surge in exports driven partly by the boom in artificial intelligence, and by robust global demand for Chinese electric vehicles https://apnews.com/article/iran-energy-china-ev-5ec89b82365893a341acc59942ce6f35 . China https://apnews.com/hub/china has largely shrugged off wider economic impacts from the Iran war as soaring energy prices pushed up global inflation. Exports rose 17.6% in the first half of the year from a year earlier, and 27% in June https://apnews.com/article/china-trade-ai-tech-economy-29da1a43eba2961b57f6cfbe6f936e42 , according to customs data. But domestic spending and investment have lagged, limiting the boost from export manufacturing for an economy that has struggled to regain momentum since parts of China were locked down during the COVID-19 pandemic. "This was the slowest growth in any quarter since the lockdown-impacted fourth quarter of 2022," said Lynn Song, chief economist for Greater China at ING Bank in a note. Some economists say China's economy is becoming increasingly unbalanced as heavy state support and private investments pour into frontier technologies https://apnews.com/article/china-five-year-plan-technology-economy-7face4580fcfba44410ff2134a09d6bb like AI, computer chips https://apnews.com/article/ai-chips-nvidia-huawei-china-1ae6228c4928ddbb43f984e9b38f49dd and robotics https://apnews.com/article/china-humanoid-robots-ai-demand-7d542b5ee92caa9d79efa28de89afbbe while other areas such as lower-value manufacturing and jobs creating services industries languish. Exports of high-tech products https://apnews.com/article/china-trade-ai-tech-economy-29da1a43eba2961b57f6cfbe6f936e42 such as electric vehicles, computer chips and other electronic equipment have risen sharply, helped by hefty government support since China's leaders have made development of advanced technologies a top priority. China ran a record $1.2 trillion global trade surplus https://apnews.com/article/china-economy-trade-surplus-record-59f6fcc80ee3afc204a024f57766d319 last year, drawing complaints from policymakers in other countries over their trade imbalances with the world's second-largest economy. Many have pointed to those heavy state subsidies, which they say contribute to an oversupply of manufactured goods that end up being exported overseas. As is true in many countries, the expansion of AI and robotics has also raised worries at home over whether businesses will create enough jobs to sustain growth in the longer term. Chinese families have cut back https://apnews.com/article/luxury-cars-china-economy-europe-a1f4f55f2989082a2a533ab891f75408 on big purchases, their appetite for spending constrained by a prolonged property slump https://apnews.com/article/china-vanke-property-real-estate-a0bc5a9d1ae887ee3fa027f408582f60 and uncertainties over jobs and wages. As China remains reliant on its exports to sustain overall growth, "China's growth model has become increasingly imbalanced," said Eswar Prasad, a professor of economics and trade policy at Cornell University. Substantially increasing domestic demand will be tough as confidence remains weak, he added.