Three Things in China
Three quick highlights from China
China’s real GDP growth slowed from 5.0% year over year in Q1 to 4.3% in Q2, below the consensus expectation of 4.5%.
GDP missed expectations
China’s real GDP growth slowed from 5.0% yoy in Q1 to 4.3% yoy in Q2, below the consensus expectation of 4.5% yoy. The divergence in the economy continued to widen in June: industrial production growth rose to 5.3% yoy, retail sales growth remained anemic at 1.0% yoy, and year-to-date fixed asset investment growth slid further to -5.7% yoy. With GDP growth now below the lower bound of the government’s full-year target range of 4.5-5%, we expect policymakers to accelerate fiscal spending in Q3 to prevent a further loss of growth momentum.
Trade data surprised to the upside again
China’s June imports and exports jumped 36% yoy and 27% yoy, respectively, in nominal USD terms, both well above consensus expectations. The AI capex boom played an important role: semiconductor imports and exports surged 72% yoy and 122% yoy, respectively. But most of the increases were price-driven, as semiconductor import and export volumes grew only 6.6% yoy and -0.5% yoy, respectively. The monthly trade surplus reached a record high of US$125.6bn in June.
July Politburo meeting preview
China’s top leadership is expected to convene the July Politburo meeting before month-end—usually in the final week of July based on past practice—to set the H2 macro policy stance. After weaker-than-expected Q2 GDP, we expect policymakers to strengthen easing rhetoric and accelerate the implementation of already-planned demand-side measures, including the RMB800bn new policy-based financial instrument, which we estimate could boost GDP by 0.5pp. That said, we expect policymakers to maintain their strategic focus on high-tech development amid the US-China AI race.
Recent GS China macro research
Thematic research and local marketing takeaways
- Asia in Focus: A New Funding Source for China’s High-Tech Ambitions, 12 July 2026
- China: What do local clients think about the economy? Local marketing takeaways, June 2026, 30 June 2026
Data comments and trackers
- AEJ Week Ahead: China July Politburo meeting, Korea GDP, and BI meeting, 17 July 2026
- China: SAFE data suggest some FX inflows in June, 17 July 2026
- China Economic Activity and Policy Tracker: July 17, 17 July 2026
- China: July Politburo meeting preview: Stronger easing rhetoric likely, but demand-side stimulus remains key, 16 July 2026
- China: Weaker-than-expected money and credit data in June; PBOC press conference suggests broad easing remains conditional, 15 July 2026
- China: 70-city average primary property price decline narrowed further in June, with Tier-1 cities posting sequential gains, 15 July 2026
- China: Trade growth accelerated further in June, 14 July 2026
- China: China’s 15th FYP for Expanding Consumption — Supply-Side Push, Demand-Side Constraints, 14 July 2026
- China: CPI inflation softened from May to June, and PPI inflation likely peaked, 9 July 2026
- China: PBOC reiterated its measured easing stance at Q2 MPC meeting; Governor Pan unveiled package to support CNH market in Hong Kong, 9 July 2026
Team presentation materials and webinar replays
- Macro & Strategy | Global Macro, China FX & Rates, Market Views (In Mandarin), 13 July 2026
- China: GS China Economic Outlook: July 2026 [Presentation], 3 July 2026