China's economy grew at its slowest pace in more than three years in the second quarter, as weak consumption overshadowed the manufacturing and export sectors, raising concerns about the long-term sustainability of its unbalanced growth model.

Gross domestic product grew 4.3% from April to June, down from 5% in the first quarter, coming in below the lower end of China's annual target of 4.5% to 5%.

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Attention now turns to the closely watched Politburo meeting of the Communist Party, expected later this month, where senior leaders typically assess economic conditions and adjust policies to maintain the growth trajectory. However, many economists believe the bigger challenge lies not in the pace of growth but in its composition. Data on Wednesday showed retail sales rose 1.0% in June and industrial output expanded 5.3%, indicating heavy reliance on global demand for manufactured goods, at a time when trading partners complain about China's imbalances and the Iranian war casts a shadow over the global economy. Trade data released on Tuesday showed that external demand has so far compensated for China's domestic weakness, with exports surpassing expectations by rising 27%, driven by the global AI boom.