Market Highlight 16.07.2026

China’s economic growth slowed in Q2/2026 to its weakest pace in more than three years, as strong exports driven by the AI boom were unable to offset domestic economic difficulties and weaker consumer spending. According to official data released on Wednesday, China’s gross domestic product (GDP) grew by 4,3% in Q2 from the same period last year, down from +5% in the first quarter. This marked the slowest growth rate since late 2022, when the country was dealing with the economic consequences of the Covid-19 pandemic. Earlier this week, a report showed that China’s exports in June rose 27% from a year earlier, mainly supported by demand from the AI sector, with semiconductor exports increasing by more than 120%. However, weakness in the property market has drained household savings, making many people reluctant to spend. Young people are finding it increasingly difficult to secure jobs, while deflation is reducing corporate profits. The weak data prompted Morgan Stanley and ANZ to cut their GDP growth forecasts for this year to only +4,6%. The Chinese Government has set a growth target of 4,5% - 5% for this year.

The war in Iran has not affected China’s economy as severely as many other countries. China has effectively mitigated the oil shock by importing less oil and using its reserves. The strong development of the electric vehicle industry has also reduced domestic demand for fossil fuels. Meanwhile, the Middle East conflict has boosted export demand for China’s green technology products, such as solar panels.

Domestically, interbank USD/VND continued to remain around the 26.260 - 26.270 range on Tuesday. The daily ceiling was raised sharply by a further VND 8 to 26.494.

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