Asia Chart of the Week: China‘s balance challenge

Research evidence excerpt

Asia Chart of the Week: China‘s balance challenge

3 July 2026

Economics

Asia Asia Chart of the Week

China’s balance challenge

Yes, it’s an oooold subject. But it’s highly relevant nonetheless, and arguably more

Frederic Neumann

and more so. China’s economy is not only slowing, it is also highly imbalanced, Chief Asia Economist, Co-head Global Research Asia

with exports powering ahead and local demand sluggish at best. Recent data only The Hongkong and Shanghai Banking Corporation Limited

fredericneumann@hsbc.com.hk

points to an even starker divergence between the external and the domestic. As +852 2822 4556

we highlighted last month, the wobbly labour market is contributing to consumer Taylor Wang

caution, on top of the ongoing property market malaise. Manufacturers are faring Economist, China

The Hongkong and Shanghai Banking Corporation Limited

better, supported by soaring shipments, especially electronics as the global AI taylor.t.l.wang@hsbc.com.hk

hardware boom lifts trade around the region. At the same time, weak demand at +852 2288 8650

home also means that China is buying less, at least proportionately so, from the Abanti Bhaumik

Associate

rest of the world. Especially Europe is feeling the pinch, with China’s bilateral trade Bangalore

surplus running at more than one billion US dollars per day, leading to friction.

Elsewhere, notably in the rest of Asia and the US, the consequences of China’s

growth imbalance are less keenly felt at present, largely thanks to the splurge in

data centre investment, which is driving activity and trade, and masking some of

the margin pressures that many economies otherwise might feel. That suggests,

however, that a halt to the AI boom, however unlikely it might seem at the moment,