China’s July economic data painted a grim picture for policymakers, with industrial and consumer activity slowing to their weakest pace in months.
According to Friday’s release from the National Bureau of Statistics (NBS), industrial production expanded just 5.7% year-on-year last month, marking the weakest growth since November 2024 and falling short of estimates from economists surveyed by Reuters.
That reading was a step down from the 6.8% gain in June, showing how quickly momentum has faded even as the government enacts measures to boost activity.
The consumer sector also lost steam, with retail sales rising just 3.7% in July, well below consensus expectations. That marks the slowest increase in over half a year and signals tepid appetite from Chinese consumers, who remain cautious amid job security concerns and economic uncertainty.
Fixed asset investment delivered further disappointment, registering a mere 1.6% increase over the first seven months compared to a year earlier, significantly less than what analysts had predicted and below the expansion recorded during the first half.
Beijing’s efforts to cushion the economy from multiple shocks, including the ongoing impact of U.S. trade policies, tepid demand at home, and intensifying competition, have been only partially effective.
Despite an extended truce in the U.S.-China tariff disputes, manufacturers continue to grapple with thinning profit margins and factory-gate deflation. Producer price data for July showed a 3.6% annual decline, mirroring June’s near two-year low.
Extreme weather events—ranging from severe heat waves to devastating floods—have further hampered economic output, disrupting both industrial production and daily business operations.
Looking ahead, economists polled by Reuters expect economic growth to retreat further, projecting China’s GDP will slow to 4.5% in the third quarter and 4.0% in the fourth. That trajectory would leave the country short of its 2025 target of around 5% growth, with forecasters now seeing a deceleration to 4.6% next year and further to just 4.2% in 2026.
