China GDP growth: China is the world’s second-largest economy after the United States, but the Asian giant is staring at a potential economic crisis as its GDP growth rate is witnessing a significant slowdown. According to latest data, the Chinese economy experienced its slowest growth rate in three years in the April-June quarter, despite its exports witnessing a significant increase.
Is China lagging behind India in economic growth?
While China is undoubtedly a far larger economy compared to India, it appears to be lagging behind India in terms of economic growth. In the first quarter of FY 2025-26, China recorded a 4.3% GDP growth, while India clocked an impressive 7.8%.
China’s growth was the slowest in three years, reflecting the growing gap between the country’s growing exports and the problems of domestic consumers. The growth rate was lower than 5% China recorded in the January-March quarter, and fell behind what economists had estimated.
Why China is seeing GDP slowdown?
According to leading economists, China’s stellar export figures hide deeper problems affecting the country’s economy, including a long-running real state crisis and rising unemployment.
Experts believe that a slowdown in the property market remains one of the major hurdles in China’s economic growth, with reportedly more than 14 million construction workers losing their jobs since the real estate decline began.
Another significant factor is the rising fuel prices triggered by the Iran war, which are significantly higher to previous years, making travel more expensive, and forcing Chinese citizens to increasingly avoid expensive branded goods in favor of cheaper alternatives.
This indicates that the spending power of people has declined and the financial situation of scores of families has been stagnant for a prolonged period.
Is China witnessing rising unemployment?
Economists also point to rising unemployment as a key factor hindering the growth of Chinese economy, noting that even as AI, semiconductor and electric vehicle companies in China are benefiting from strong demand, workers is other sectors are left behind.
According to Dan Wang, China director of the economist Eurasia Group, China’s AI demand does not benefit common workers and even causes structural unemployment and underemployment. The slowdown in the property market, reduced spending and employment uncertainty are putting pressure on families, he said.
Why China’s economy is slowing down despite surging exports?
As per experts, while China has emerged as the world’s largest factory, with exports across various sectors witnessing an impressive surge, the country’s domestic economy is burdened by a long-standing asset crisis, weak consumer spending, and sluggish employment.
China’s exports have boomed in recent years amid a global demand for AI, clean energy products, electric vehicles, batteries and semiconductors. In June, China clocked a 27% year-on-year growth, amid a surge in demand for AI chips, batteries and electric vehicles.
The surge in exports raised China’s trade surplus to more than $125 billion, the second highest in its history, even as sluggish domestic demand has significantly slowed down GDP growth.
First published on: Jul 15, 2026 06:53 PM IST
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