cross-posted from: https://mander.xyz/post/56932020
Industrial output growth slows and retail sales nearly flat as policymakers face calls to step up support.
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China’s industrial output softened last month and consumer spending was muted, underlining pressure on the country’s top leadership to accelerate fiscal stimulus spending and revive stronger growth in the second half of the year.
Industrial output expanded 4.5 per cent in July on a year earlier, official statistics showed on Monday.
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Retail sales rose just 0.6 per cent last month, compared with analyst forecasts of 1.5 per cent growth and 1 per cent in June, as the waning effects of consumer goods trade-in subsidies weighed on household spending. Fixed asset investment declined 6.7 per cent for the first seven months of the year on the same period in 2025, deepening from a 5.7 per cent drop in the year to June.
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Fu Linghui, spokesperson and chief economist for the National Bureau of Statistics, said: “Some regions experienced extreme weather such as high temperatures and heavy rainfall in July, disrupting market supply and demand.”
He added that the readings were affected by a “complex and severe” international situation, while weak domestic demand, which analysts say is because of a grinding years-long property slowdown, also played a role. “Domestically the imbalance between strong supply and weak demand is relatively prominent,” Fu said.
China last month unveiled second-quarter growth of 4.3 per cent, one of its lowest readings in decades, as weak consumer demand and falling investment weighed on sentiment.
The figure, which fell below Beijing’s official 2026 full-year growth target band of 4.5-5 per cent, was the lowest reading since the formal introduction of GDP reporting in the early 1990s, apart from the three-year period of Covid-19 restrictions.
China has relied on industrial output and exports — which rose 23.9 per cent in July — for economic activity in recent years as the property sector slowdown has constrained household spending.
But an official gauge of factory activity unexpectedly contracted in July, adding to concerns over momentum in the world’s second-largest economy.
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Goldman Sachs economists said the government-subsidised consumer goods trade-in programme, which supported retail sales from late 2024, had also become a drag.
“Fading support from the trade-in program will continue to depress retail sales growth through the rest of this year,” they said.
“With confidence and income expectations still low and property prices yet to find a bottom,” retail sales growth will be subdued at 1.5 per cent year on year in 2026, they estimated.
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