China’s economic slowdown appears to be persisting into the current month, based on disappointing industrial and consumer spending data released on Monday. Factory output expansion decelerated to 4.5% year-over-year in July, down from 5.3% in June and falling short of analyst expectations for 4.8% growth. Retail sales growth also underperformed projections, rising just 0.6% compared to forecasts for 1.5% growth, representing a decline from the previous month’s 1% expansion despite anticipated seasonal spending from summer travel.
The continued weakness follows a particularly poor quarterly performance earlier in the year. China’s gross domestic product grew at an annualized rate of 4.3% in the three months to June, missing the government’s stated target range of 4.5% to 5% and marking one of the weakest quarterly results since official reporting began in the early 1990s. Officials attributed some of the July deterioration to weather disruptions, citing extreme temperatures and heavy rainfall that affected market conditions.
The developments have intensified calls for Beijing to accelerate its response through fiscal stimulus. Premier Li Qiang acknowledged the challenges at a state council meeting, noting that weak internal demand and rising external uncertainties pose difficulties for various industries and businesses. He emphasized the need to strengthen overseas demand for Chinese goods as a counterbalance to domestic weakness and advocated for expanded international trade cooperation.
Economists remain cautiously optimistic about near-term prospects. Analysts anticipate that government spending measures will provide support for activity in coming months. Some observers noted that recent stimulus effects from artificial intelligence-related investments continued to benefit manufacturing, while attributing some weakness to temporary disruptions from recent weather events. Forecasters expect a gradual improvement in growth rates for the remainder of the period if planned fiscal measures proceed as anticipated.
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