HONG KONG - China's economy expanded at a slower 4.3 percent annualized rate in the April-June quarter, authorities reported Wednesday, marking the weakest showing in more than three years.

The results missed forecasts and trailed the solid 5 percent pace recorded in January-March, even as exports climbed on artificial intelligence demand and robust global interest in Chinese electric vehicles.

China has largely sidestepped wider fallout from the Iran conflict despite rising energy costs that lifted global inflation. Exports advanced 17.6 percent in the first half from a year earlier and surged 27 percent in June, customs figures showed.

Yet domestic consumption and investment have trailed, curbing gains from export manufacturing in an economy still seeking momentum after pandemic lockdowns.

"This marked the slowest growth in any quarter since the lockdown-affected fourth quarter of 2022," noted Lynn Song, chief economist for Greater China at ING Bank.

Some analysts observe the economy tilting further off balance as state and private funds flow heavily into frontier fields such as AI, chips and robotics while lower-value manufacturing and job-rich services sectors weaken.

High-tech exports including electric vehicles, semiconductors and electronics have risen sharply, supported by strong government backing as leaders emphasize advanced technology development.

China posted a record 1.2 trillion dollar global trade surplus last year, prompting complaints from other nations over imbalances with the world's second-largest economy. Many cite heavy subsidies that fuel oversupply of goods shipped abroad. Industrial output rose 5.4 percent in the first half from a year earlier.

As in many nations, AI and robotics growth has prompted local concerns over whether firms will generate enough jobs for longer-term expansion.

Chinese households have trimmed major purchases amid a drawn-out property slump and uncertainty over employment and wages.

With China depending more on exports to drive growth, "China's growth model has become increasingly imbalanced," said Eswar Prasad, economics and trade policy professor at Cornell University. Raising domestic demand substantially will prove difficult while confidence stays weak, he added.

Mao Shengyong, deputy head of China's National Bureau of Statistics, told reporters that amid global instability the mismatch between strong supply and weak demand "remains acute" domestically.

While pursuing high-tech manufacturing and higher-quality growth, China will build a stronger domestic market and back stable employment, he said.

Fixed-asset investment fell 5.7 percent year-on-year in the first half, retail sales rose a slim 1.3 percent, and housing prices kept declining.

China's economy is experiencing a "significant transition," said Wei Li, Head of Multi-Asset Investments at BNP Paribas Securities (China).

Leaders set a 4.5 percent to 5 percent growth target for 2026, below last year's 5 percent. First-half expansion reached 4.7 percent, Wednesday's data showed.

The International Monetary Fund lifted its China annual growth outlook by 0.2 percentage points to 4.6 percent and projects 4.1 percent expansion in 2027.