China's First-Half Growth Rate at 4.7%...Achieving Annual Target Likely to Be Difficult (Comprehensive)

Q2 Growth Slows Compared to Q1
Sluggish Domestic Demand and Real Estate Downturn
Fixed Asset Investment Drops 5.7% in First Half

China's second-quarter gross domestic product (GDP) growth rate recorded 4.3%, falling short of expectations. With the combined growth rate for the first half of the year (Q1 and Q2) reaching only 4.7%, some analysts are now saying that the government’s annual growth target may be difficult to achieve.

On the 10th, citizens are shopping at a large supermarket in Beijing, China. Photo by Reuters-Yonhap News.

According to China’s National Bureau of Statistics on July 15, China’s second-quarter economic growth rate was 4.3% year-on-year. This figure is lower than the forecast of 4.48% by Chinese financial information provider Wind, and lower than the previous quarter's 5.0%. As a result, cumulative growth in the first half of the year amounted to just 4.7%.

Earlier, during the 14th National People’s Congress, China had set an annual target of “4.5%-5%,” a downward adjustment from the “around 5%” target maintained in recent years. According to the Hong Kong daily South China Morning Post (SCMP), there is a prevailing view in the market that domestic demand weakness, a prolonged real estate downturn, and external uncertainties are each making it difficult for the Chinese government to achieve its annual growth goal.

Some consumption indicators did show improvement. In June, retail sales increased by 1% year-on-year, surpassing Wind's compiled market forecast of a 0.09% increase. In contrast, retail sales had decreased by 0.6% in May, marking the first decline since pandemic lockdowns ended in late 2022. On the other hand, fixed-asset investment — which includes infrastructure, manufacturing, and real estate construction — declined by 5.7% year-on-year in the first half of 2026 (January to June). This drop is steeper than the 4.1% decrease recorded from January to May.

Mao Shengyong, Deputy Commissioner of the National Bureau of Statistics, explained at a press conference on this day that "In the first half of 2026, China’s economy remained stable within a reasonable range, enduring both domestic and external pressures." He added, "Production and supply grew relatively quickly, overall employment remained stable, and prices rose moderately." He further noted, "Foreign trade increased at a healthy pace, new growth drivers expanded rapidly, and public welfare was effectively ensured."

Meanwhile, the National Bureau of Statistics announced that in the second half of the year, economic policy will focus on expanding domestic demand, improving the supply structure, and fostering new engines of growth. The agency added that it will work to stabilize employment, enterprises, the market, and expectations, while accelerating the creation of a strong domestic market to pursue both qualitative and quantitative economic growth.

This content was produced with the assistance of AI translation services.