China’s Li Qiang calls for stronger policy response ahead of GDP data

Chinese Premier Li Qiang on Monday called for "a comprehensive and objective understanding of the current economic situation" and urged stronger counter-cyclical policy adjustments to bolster growth, according to Reuters. The remarks come two days before the National Bureau of Statistics is set to release second-quarter GDP figures on July 15, alongside June retail sales and industrial production data.cnbc+3

Signals From the Top

Li's comments reflect growing awareness in Beijing that the world's second-largest economy faces an uneven recovery, with robust exports masking persistent softness in domestic consumption. According to CNBC, Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38% recently projected second-quarter GDP growth of just 3.5% on a quarter-over-quarter annualized basis, a sharp deceleration from the first quarter. The median forecast compiled ahead of the data release points to growth of just 0.2% quarter-over-quarter annualized, down from 1.8% in the first three months of the year.marctomarket+1

China's economy grew 5.0% year-over-year in the first quarter of 2026, hitting the upper end of the government's annual target range of 4.5% to 5%. But that performance was driven primarily by a 14.7% surge in exports and high-tech manufacturing, while retail sales grew a modest 2.4% year-over-year, according to J.P. Morgan JPMorgan Chase & Co. ↘ 0.73% Asset Management. BBVA Research noted that the pattern of "strong supply and weak demand" has persisted, with sluggish retail sales attributed to the fading effects of national consumer subsidy programs and continued weakness in the housing market.npr+2

External Bright Spots, Internal Pressures

Some recent indicators have offered encouragement. China's exports to the United States rebounded in recent months, growing 11.3% and 35.4% year-over-year in April and May respectively, following double-digit declines for much of the prior year when President Donald Trump escalated tariffs on Chinese goods. An independent survey from the China Beige Book found that factory activity "accelerated" in June, with U.S.-bound orders seeing "sharp year-on-year gains".cnbc

Yet the World Bank projected in a July update that China's economy would expand 4.4% for all of 2026, against a backdrop of slowing global growth forecast at just 2.5%. Fitch Ratings warned earlier this year that domestic demand weakness would constrain growth, citing sluggish consumer confidence.people+2

Looking Ahead

Li's call for policy adjustment echoes a pattern of signaling ahead of data releases. At the Summer Davos forum in Dalian last month, the premier characterized China's economy with the words "stability, innovation, dynamism, and integration". Whether Beijing follows through with fresh stimulus measures may hinge on the severity of the second-quarter slowdown revealed in this week's data.weforum+1