China’s Export Shield Is Starting To Weaken As Domestic Slowdown Deepens

London, 22 July 2026 – The two forces protecting China from a more serious economic slowdown – industrial production and exports – are beginning to weaken, according to new analysis from market intelligence provider Permutable.

China’s economy grew 4.3% year on year in the second quarter, supported by resilient factory output and a sharp rise in exports. But beneath the headline figure, household spending remained subdued, private investment contracted and the property market continued to weigh on confidence.

Permutable’s Global Macro Sentiment Indices show that expenditure-growth sentiment fell from close to two standard deviations above its historical norm at the beginning of the year to −1.7σ by 16 July.

Until now, China’s factories and overseas customers have absorbed much of the...