- India’s GDP growth outpaced China’s despite large imports.
- China’s economic growth slowed unexpectedly to 4.3 percent.
- Real estate crisis, low spending, unemployment caused China’s slowdown.
India has outpaced China in GDP growth even as it continues to import large quantities of goods from its neighbour, according to recent data.
A recent report said India remains one of the largest importers of Chinese goods. Despite this, China’s economic growth has slowed, while India has recorded a higher GDP growth rate.
China’s GDP Growth Slows
According to China’s GDP growth report released on Wednesday, the country’s economy expanded by 4.3 per cent in the April-June quarter.
The latest reading was lower than the 5 per cent growth recorded during the January-March quarter.
The report said this is the first time in several years that China’s economy has slowed to this extent, a trend that economists had not anticipated.
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India Records Higher Growth
According to recently released data, India’s GDP growth rate stood at 7.8 per cent, significantly higher than China’s.
The report said India’s growth rate could improve further in the future.
It also noted that while India imports a large volume of goods from China, exports from India to China remain comparatively low.
Why Is China’s GDP Slowing?
Speaking to CNBC a few days ago, Yu Song, Chief Economist at UBS China, identified three key reasons behind the slowdown in China’s economy.
According to Yu Song, artificial intelligence is not responsible for the decline. Instead, he said AI has benefited China.
He identified the prolonged real estate crisis as the primary reason behind weaker growth, saying China’s property market has been in a steep decline for some time, with people preferring to save rather than invest in property.
He also pointed to weaker consumer spending. According to him, fuel prices have risen in China due to the US-Iran conflict, prompting consumers to move away from expensive branded products in favour of cheaper alternatives.
Yu Song further said declining employment has also weighed on the economy. While AI has benefited China, he said it has also significantly reduced the number of workers.
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