TLDR:
- China’s retail sales rose just 0.6% in July, while industrial output growth slowed to 4.5% from 5.3%.
- Fixed-asset investment fell 6.7% through July, worsening from a 5.7% contraction recorded in the first half.
- Property investment dropped 19.2% through July as new construction starts fell 24% and sales value slid 13.1%.
- China’s exports surged 23.9% in July, while high-tech exports jumped 40.7%, offsetting weak domestic demand.
China’s economy weakened further in July as slower factory growth, softer consumer spending, falling investment, and a deeper property downturn exposed persistent domestic demand pressure. Industrial output rose 4.5% year over year, below June’s 5.3% increase and the 4.8% expansion economists had expected.
The slowdown became more visible across households and businesses as weaker spending and investment reinforced the pressure from China’s property downturn. Retail sales increased only 0.6%, while fixed-asset investment contracted further and several property indicators continued to deteriorate.
Meanwhile, exports remained an important source of support, widening the gap between resilient external demand and weaker domestic activity.
Consumer Spending and Investment Lose More Ground
Retail sales growth slowed from 1% in June and missed the 1.5% forecast. Excluding automobiles, sales rose 2.5%, underlining the scale of weakness in vehicle demand. Official data showed motor-vehicle retail sales falling 17% in July.
Passenger-car retail sales dropped 20.9% year over year to 1.461 million units. Sales were also 8.8% lower than June, while new-energy vehicle penetration reached a record 65.1%. Investment figures added to the slowdown.
Fixed-asset investment excluding rural households fell 6.7% during January through July, compared with a 5.7% decline in the first half. July alone posted a 1.42% seasonally adjusted monthly decline.
Source: X
Non-governmental investment fell 9.4%, manufacturing investment declined 1.7%, and infrastructure investment dropped 3.6%. Property remained the heaviest drag. Real-estate development investment fell 19.2% to 4.30 trillion yuan during the first seven months.
New construction starts dropped 24%, while commercial-building sales by floor area declined 11.8%. Sales value fell 13.1%, and funds available to developers dropped 20.3%. Domestic loans to developers fell 32.1%, highlighting continued financing stress across the sector.
Exports Surge as Domestic Demand and Youth Employment Weaken
China’s export sector, however, provided a sharp contrast. Exports surged 23.9% year over year in July as shipments of semiconductors, high-tech products, and vehicles strengthened. High-tech exports rose 40.7%, helping offset weak household spending and subdued private investment.
Online retail sales of goods also increased 4.6% during January through July. Telecommunications-equipment retail sales climbed 15.1%, showing that some technology-related categories continued expanding even as broader consumer demand slowed.
Nevertheless, inflation remained subdued. Consumer prices rose 0.5% year over year in July but slipped 0.1% from June, signaling limited pricing pressure. Labor conditions also weakened. Urban unemployment among people aged 16 to 24, excluding students, rose to 17.9% from 14.9% in June.
That increase marked an 11-month high and added another constraint on consumption. Premier Li Qiang acknowledged insufficient domestic demand and called for stronger support. Second-quarter GDP growth had already slowed to 4.3%, below Beijing’s 2026 target range of 4.5% to 5%.
The July figures therefore showed an economy split between resilient exports and weaker domestic engines. Consumption, private investment, property, and youth employment all deteriorated or remained subdued.
Export strength continued to provide support, but the latest data showed that the broader slowdown was rooted mainly in weak spending, investment, and real-estate activity.
