Slowing Output and Spending
China’s industrial output rose by just 5.7% in July compared to the previous year, marking the weakest growth since last November and falling behind June’s 6.8% gain. Retail sales climbed only 3.7%, both figures falling short of expectations and pointing to a slowdown in domestic activity.
Property Market Dragging Hard
Housing prices continued to decline, reflecting persistent weakness in the real estate sector. Property investment remains subdued, weighing heavily on overall economic momentum.
Weak Investment and Deflationary Pressures
Fixed asset investment, a key driver of the economy, grew by only 1.6% year-over-year through July—well below earlier targets. Producer prices contracted sharply while consumer prices remained almost flat, signaling rising deflation risks.
Economic Outlook Darkens
Analysts now expect GDP growth to slow to about 4.5% in the third quarter, with a further dip to 4.0% by year-end. This would put annual growth below the government’s 5% target.
Mixed Signals from Export Channels
Exports grew 7.2% in July, partly supported by a pause in U.S. tariffs. However, this export boost contrasts with the fragile domestic economy, highlighting the imbalance in China’s recovery.
Quick Summary Table
| Indicator | July 2025 Performance |
|---|---|
| Industrial Output | +5.7% (slowest since November) |
| Retail Sales | +3.7% (weakest since December) |
| Fixed Asset Investment | +1.6% year-to-date |
| Property Market | Prices and investment declining |
| Deflationary Signs | Producer prices down; consumer prices flat |
| GDP Forecast | ~4.5% Q3, ~4.0% Q4 |
China’s slowdown is raising alarms for global markets, as weaker domestic demand and falling investment weigh on the world’s second-largest economy. Without decisive stimulus or reforms, the outlook for the rest of 2025 remains under pressure.
Leave a Reply