China: Growth slowdown with uneven momentum – DBS

DBS economists Radhika Rao and Mo Ji project China’s Gross Domestic Product (GDP) growth to slow from 5.0% year-on-year in Q1 to 4.8% in Q2. They note resilient industrial production and strong export growth driven by AI-related electronics, but highlight weak retail sales, subdued household sentiment, and continued drag from declining property prices and falling fixed asset investment.

AI exports offset weak consumption

"Economic growth is expected to decelerate from 5.0% yoy in Q1 to 4.8% in Q2, amid uneven domestic momentum."

"Industrial production is expected to improve from 4.5% in April to 4.6% in June, amid resilient external demand."

"Exports growth should have maintained its momentum with growth of 20.4% in June, driven by regional AI-electronic demand."

"However, retail sales growth is projected to moderate to 0.5% in June 2026, partly due to a high base effect from last year's trade-in subsidy programs."

"Meanwhile, declining property prices continue to weigh on household wealth, suggesting consumption is likely to stay subdued in the near term."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)