China's economy expanded at its slowest pace in three years during the second quarter, highlighting ongoing challenges as weak domestic demand and a prolonged property downturn continue to weigh on growth.

According to data released by the National Bureau of Statistics, China's gross domestic product (GDP) grew by 4.3% year-over-year in the second quarter of 2026, down from 5.0% in the first quarter. The result also fell short of analysts' expectations, underscoring the difficulties facing the world's second-largest economy.

Despite the slowdown, China's manufacturing sector remains resilient. Strong global demand for semiconductors, electric vehicles, batteries, and other advanced technologies has helped factories maintain high production levels, while exports continued to post impressive gains.

However, the benefits of export growth have not fully reached Chinese households. The country's prolonged property market crisis continues to dampen investment and consumer confidence, while slower wage growth and limited employment opportunities outside manufacturing have put pressure on household spending. Retail sales have also been uneven, reflecting cautious consumer sentiment.

Trade data released this week showed China's exports surged by 27% in June compared with a year earlier, driven largely by shipments of technology products, batteries, and electric vehicles. The country also recorded one of its largest monthly trade surpluses on record, reinforcing the strength of its export sector.

Economists say the latest figures highlight an increasingly uneven recovery, with robust manufacturing and exports offsetting persistent weaknesses in the domestic economy. Many analysts believe policymakers may introduce additional stimulus measures in the coming months to support consumer spending, stabilize the property market, and maintain economic growth.

As China seeks to achieve its annual growth target, officials face the challenge of balancing export-driven momentum with efforts to revive domestic demand and restore confidence across key sectors of the economy.