China economic growth falls sharply, missing target
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- China's GDP grew 4.3% in Q2 2025, below Beijing's 4.5%-5% annual target and down from a 5% expansion in Q1, marking the lowest quarterly growth since the end of 2022
- The Q2 reading is the first full quarter of GDP data since the Iran war began on 28 February, with the article noting the conflict's impact on oil prices is pressuring China's economy
- China's National Bureau of Statistics cited "more external instability and uncertainty factors" and flagged an imbalance between strong supply and weak domestic demand
- Exports jumped 27% year-on-year in June, with monthly car exports topping one million for the first time and tech exports boosted by soaring global demand for AI data-centre semiconductors
- New home prices contracted 0.1% in June at a slightly slower pace than May, while retail sales rose 1%, recovering from a 0.6% decline in May
- Fabien Yip, a market analyst at investment platform IG, said Chinese businesses are absorbing higher energy and raw materials costs "because demand at the till is too weak to bear it," warning the pressure worsens the longer the Iran war continues
Why it matters: Beijing already cut its 2025 target to 4.5%-5% in March — its lowest since 1991 — and has now missed it in Q2, leaving little margin to absorb further Iran war-related oil shocks or continued property-sector weakness. The export strength masks a fragile domestic picture, with retail sales still recovering from a May contraction and businesses forced to eat cost increases they cannot pass on to consumers.
