China's economy grew by 4.3% year-on-year in the second quarter of 2024 [1].
This slowdown marks the weakest pace of expansion since 2022 and indicates that the government may struggle to meet its full-year growth target. The data reveals a widening gap between China's external trade success and its internal economic health.
Several domestic factors contributed to the deceleration. Weak consumer spending and business investment have hampered growth, while a prolonged slump in the property market continues to weigh on the broader economy [1], [3]. Industrial activity also remained sluggish throughout the period [2].
Specific indicators from May 2024 highlight the depth of the domestic struggle. Retail sales saw a year-on-year change of -0.6% [2]. Additionally, urban fixed-asset investment dropped by 4.1% during the same month [2].
These internal headwinds offset a surge in export growth. The rise in exports was driven in part by an artificial intelligence-related boom, which provided a critical buffer for the national GDP [1], [2]. However, the reliance on high-tech exports has not been enough to counteract the decline in domestic demand.
The second quarter, covering April through June 2024, underscores the volatility of the current economic transition [1], [2]. While the AI sector provides a new engine for growth, the traditional pillars of the Chinese economy, namely real estate and consumer retail, remain in a state of contraction.
“China's economy grew by 4.3% year-on-year in the second quarter of 2024”
The divergence between AI-driven export growth and collapsing domestic investment suggests that China is struggling to pivot its economic model. While global demand for tech infrastructure supports the GDP, the internal crisis in the property market and falling retail sales indicate a lack of confidence among domestic consumers and investors, potentially leading to a long-term period of slower structural growth.
