AI boom couldn’t save China’s economy from its slowest quarter in 3 years

China’s push into artificial intelligence, robotics and electric vehicles kept exports climbing this year, but it wasn’t enough to stop the broader economy from slowing to its weakest pace in more than three years. Official data released on Wednesday showed growth of an annualised 4.3% in the April-June quarter, down from 5% in the first quarter and below forecasts.

The country’s high-tech manufacturing push has driven strong growth in exports of electric vehicles, computer chips and other electronic products, backed by significant government support as advanced technology remains a key policy priority. Customs data showed outbound shipments rose 17.6% in the first half of the year compared with a year earlier, and climbed 27% in June alone, helped by the artificial intelligence boom and strong overseas demand for Chinese EVs.

Yet economists say the growth is increasingly uneven. Government support and private capital continue flowing into advanced sectors such as AI, robotics and semiconductor manufacturing, while lower-value manufacturing and service industries that employ far more people continue to lag. Consumer spending and investment at home remained weak, blunting the overall impact of export-led manufacturing on the economy.

The growing adoption of artificial intelligence and robotics has itself raised concerns within China over whether enough new jobs will be created to sustain economic growth over the longer term. Household spending has stayed under pressure as families continue to hold back on major purchases amid a prolonged downturn in the property market and uncertainty over wages and employment.

Mao Shengyong, deputy head of China’s National Bureau of Statistics, said ‘the imbalance between strong supply and weak demand remains acute,’ adding that China would keep pursuing ‘higher-quality economic growth’ through high-tech manufacturing while also working to build a stronger domestic market and support stable employment.

Last year, China’s global trade surplus hit $1.2 trillion, the highest on record, drawing criticism from other countries’ policymakers who argue state subsidies have created excess manufacturing capacity. Chinese leaders have set a growth target of 4.5% to 5% for 2026, lower than last year’s 5%, while the IMF recently raised its 2026 forecast for China to 4.6% and projected growth easing to 4.1% in 2027.

Image credit: Wikimedia Commons/by Ermell