China

On July 6, 2026, the People's Liberation Army Navy launched a submarine-launched ballistic missile from the South China Sea to a splashdown zone near Tuvalu and Kiribati, traveling approximately 7,000 kilometers — the first publicly announced Chinese SLBM test in open international waters in over four decades. Taiwan's Leshan Radar Station tracked the missile and shared telemetry with the United States, while analysts assessed the launch profile as consistent with a simulated strike against the US West Coast. The test coincided with the opening of a China-Russia joint naval exercise and a new Australia-Fiji defense treaty, with analysts and regional governments interpreting the timing as deliberate strategic signaling.

China's June 2026 export growth of 27 percent year-on-year beat the Reuters consensus of 18.2 percent by nearly nine percentage points, driven by record integrated-circuit volumes and strong EV and battery shipments, pushing the monthly trade surplus to approximately $125.6 billion. The data were released alongside a Q2 GDP print of 4.3 percent, below the 4.5 percent consensus and the weakest non-rebound quarter since late 2022, alongside the first-ever contraction in first-half fixed-asset investment. Analysts are divided on how much of the export surge reflects structural demand for AI compute hardware versus front-loading ahead of the July 24 expiration of a 10 percent baseline U.S. tariff, with customs officials emphasizing structural factors and external economists flagging both.

China's central bank is expected to keep its one-year and five-year Loan Prime Rates unchanged at 3.00% and 3.50% on July 20, extending a streak of rate stability that began in May 2025. Instead of cutting benchmark rates, the PBOC has injected over 2.5 trillion yuan in liquidity through outright reverse repo operations since June, constrained by bank net interest margins already below the 1.8% regulatory threshold and renminbi exchange rate pressures. The policy hold comes despite second-quarter GDP growth of 4.3%, the slowest pace since late 2022 and below the 4.5% consensus forecast, with property investment falling 18% in the first half of the year.

China's first State Council-level outbound investment regulation took effect July 1, 2026, consolidating previously fragmented ministry-level rules into a single framework covering over 50,000 Chinese-operated overseas enterprises across roughly 190 countries. The regulation expands the definition of covered investments to include resident individuals and indirect transfers of technology or data through offshore vehicles, and introduces forced divestiture and personal liability as new enforcement tools. Implementing rules from MOFCOM and NDRC defining sector lists, monetary thresholds, and security review procedures have not yet been published, leaving key operational details unresolved.

China's economy grew 4.3% year-on-year in Q2 2026, falling below both the 4.5% analyst consensus and the lower bound of Beijing's official 4.5–5% full-year target for the first time since the pandemic. The result reflects a sharply divided economy: industrial output and exports surged, with June goods exports up 27% year-on-year, while retail sales grew just 1% and real-estate development investment collapsed 18% in the first half. The data shifts attention to the late-July Politburo meeting, where analysts expect targeted stimulus measures focused on consumption rather than broad supply-side spending.