China's Growth Stalls as Domestic Demand Falters

The second-quarter performance follows a 5.0% expansion in the first three months of the year, underscoring the fragility of the current recovery. While factories continue to churn out high-value goods—specifically AI hardware and green technology—this industrial output is not enough to offset the drag caused by the domestic downturn. The property sector, once a primary engine of Chinese growth, remains mired in a slump that continues to dampen consumer confidence and investment.

External factors, particularly the oil shock stemming from the Iran conflict, have further complicated the fiscal landscape. Economists are now calling for more aggressive state intervention to bridge the gap. Suggestions for stabilization include accelerated local government bond issuance to kickstart public investment and a potential interest rate cut by the People’s Bank of China to ease liquidity constraints.