The National Bureau of Statistics in Beijing has just published the figures for the 2nd quarter of 2026 of the Chinese economy. Year-on-year growth was 4.3% after 5% in the 1st quarter, i.e., over the 1st half of the year, a pace of 4.7% in the range between 4.5 and 5% which is the authorities' target for 2026. The only figure that caught the attention of commentators was 4.3%, pointing out that it is one of the lowest levels in recent decades. It was interpreted as a sign of the difficulties that the country would face. What is the real situation?

It is indisputable that the figure for the 2nd quarter is low, but the conclusions that are drawn are irrelevant for two reasons. First of all, the comparison of growth rates over time does not make much sense since it ignores the volume produced each year. The size of the Chinese economy is unrelated to what it was, for example, fifteen years ago. It has more than doubled, which means that the 4.3% increase represents a much higher wealth creation than at a time when growth was 7%.

Secondly, the international environment in 2026, which is put forward to explain the weak results of the economies of developed countries, inevitably affects China. It must therefore be compared with American growth, which is almost twice as slow, and with the stagnation of the Japanese and European economies. In an increasingly competitive world, it is essential to have a fair view of the situation of competitors and, above all, not to underestimate their performance.

The "Chinese model" faces obvious difficulties and weakening domestic demand. Sales of goods and services increased by only 2.7% in the first half of the year, with a real gap to the detriment of goods with growth of only 1.1%. The situation of investments is worse since they fell by 2.7% in total with -2.4% for infrastructure, -1.2% for industry and -18% for real estate. The major crisis that affected this sector with the bankruptcy of the developer Evergrande has therefore not been resolved.

It is therefore foreign trade that, since the beginning of the year, has been driving Chinese growth. It represented 3,750 billion dollars, up 16.9%. Exports grew by 13.4% and imports by 22.1%, largely due to higher oil and natural gas prices. The balance is in surplus of 650 billion. Volumes, due to trade tensions, are little changed with the United States and the surplus is stable at around 140 billion. On the other hand, they are up very strongly with Europe (+14%) with a surplus of 177 billion, mainly with Germany and the Netherlands. But for this country, the figures are overestimated because they include deliveries to the port of Rotterdam, which are, for the most part, re-exported to other countries of the European Union.

China still has a deficit with Japan ($13 billion) and Australia ($47 billion), as the country has become one of its main suppliers of fossil fuels. But there is a very strong expansion of trade with ASEAN countries, a region that has become the leading trading partner of Chinese companies: +22.5% since the beginning of the year, i.e. 626 billion with a surplus of 173 billion. Chinese foreign trade is therefore undergoing a profound geographical evolution that must be seen in relation to the intense diplomatic activity of President Xi Jinping, who has multiplied meetings with the leaders of Southeast Asian countries to conclude partnerships facilitating trade. This evolution is accompanied by a major industrial and technological transformation.

Manufacturing production has been up 5.6% since the beginning of the year and this increase has been concentrated in capital goods, high technology (+13.3%) with 3D printing machines (+48%), industrial robots (+28%) and lithium-ion batteries (+39%). These efforts also concern the transition to "green energy". While China is by far the leading producer and user of renewable energy, its intermittency requires new technologies for storage. 

For example, a solar thermal power plant project with new storage methods has been launched in northern China. Connected to wind turbines and local solar panels, it will provide electricity, store it during peak periods, reinject it into the grid if necessary and thus compensate for the intermittency of renewable energies. The use of coal-fired power plants can then be reduced.

However, the Chinese economy is facing rapid demographic change with an aging population and stagnant domestic consumption. The authorities are aware of this, as evidenced by President Xi Jinping's field visits, mainly to major cities. The abolition of the one-child rule was not enough. It is important to create favourable conditions for families at the local level through improved public services. China is moving from a logic of building giant infrastructure that generates jobs but also debt to a model of investment in public facilities that is close to that of developed countries.

In addition to the demographic challenge, China must manage the consequences of the collapse of the real estate sector with its effects on the financial situation of the sector and the indebtedness of local authorities. But inflation is very low (1%) and the considerable reserves accumulated by the Central Bank thanks to trade surpluses rule out any risk of financial crisis from outside. However, this is a new situation for the country, which is also experiencing what the developed countries have experienced before it.

These are all realities that companies and governments in developed countries must take into account. Today, China is one of them and no longer a developing country like India or Indonesia, for example. Chinese companies benefit from a double advantage, the size, unparalleled for the moment, of its domestic market and the enormous training effort that means that hundreds of thousands of graduates, particularly in scientific or technological fields, graduate from universities every year. The argument that, for example, the car industry has built up overcapacity and is therefore forced to attack external markets makes no sense.

A company with international ambitions, and this is the case for all major car manufacturers, including China, calibrates its investments and production capacities according to its objectives. The size of its domestic market gives it an advantage in terms of production costs and innovation. When Europe announces the end of combustion engines in ten years and we have neither the technologies nor the raw materials to produce batteries, we should not be surprised by the breakthrough of Chinese manufacturers whose export forecasts for 2026 are 10 million vehicles compared to 7 million in 2025.

China is neither in decline nor in difficulty, but must solve the problems that developed countries have experienced before it and change its economic model. France and Europe must prepare for this new reality and seize the opportunities that can be based on balanced partnerships where everyone wins.