China Q2 2026 Real GDP Growth 4.3%, Nominal GDP 5.9%, GDP Deflator Turns Positive at 1.5%

Macroeconomic data for the second quarter of 2026 showed that China's real GDP grew 4.3% year-on-year, moderating from the first quarter. Export growth picked up, supported by resilient external demand and a recovery in shipments to the United States, but fixed asset investment turned from positive to negative, consumption growth remained sluggish, and the property market continued to contract. Nominal GDP growth rose to 5.9%, up about 0.9 percentage points from the first quarter, setting a new single-quarter high in the past five years. The GDP deflator turned positive year-on-year to about 1.5% in the quarter, ending a streak of negative readings that had persisted since the second quarter of 2023 and marking the first positive reading in nearly three years.

From a longer-term perspective, the AI technology revolution is reshaping the underlying logic of macroeconomic operations. On the supply side, the key to AI technology lies in whether it can stimulate broader technological innovation among upstream and downstream enterprises and across other industries.

The direction of supply-side efforts lies in ensuring sufficient market competition, as well as reforming scientific research incentives and organizational structures.

To address these phenomena, it is necessary to improve the unemployment insurance and social safety net systems to cushion the impact of job displacement, reform the education system to reshape the human capital structure, and restructure the distribution mechanism of production factors to break the monopoly of capital and technology over the dividends of AI.