China Q2 GDP Growth Slows to 4.3%, Missing Forecasts

China's economy decelerated sharply in the second quarter of 2025, posting year-on-year GDP growth of 4.3% — missing analyst expectations of 4.5% and marking a significant cooldown from the 5% expansion recorded in the first quarter. The quarter-on-quarter reading came in at 0.9%, matching forecasts but slipping from the prior quarter's 1.3% sequential gain, signaling a loss of momentum heading into the second half of the year.

The miss on the annual figure raises fresh concerns about Beijing's ability to sustain robust economic output amid persistent headwinds, including lingering trade tensions, weak domestic consumption, and a prolonged property sector downturn. While the quarter-on-quarter result met expectations, the steep year-on-year drop — from 5.0% to 4.3% — underscores just how much the growth engine has throttled back in a single quarter.

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On the labor market front, China's national urban surveyed unemployment rate averaged 5.2% for the first half of 2026, suggesting the jobs picture remains under pressure even as policymakers push stimulus measures to prop up activity. The unemployment figure adds another layer of complexity for Chinese authorities weighing when and how aggressively to deploy additional economic support.

Market participants and analysts will be watching closely for Beijing's policy response, as the data increases pressure on officials to introduce further fiscal or monetary easing to keep full-year growth targets within reach. The weaker-than-expected annual print could also ripple through global commodity demand outlooks and emerging market sentiment in the near term.

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