SHANGHAI, CHINA – AUGUST 14, 2025 – Tourists are visiting the Bund in Shanghai, China on August 14, 2025.
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China’s economy lost momentum in July, with growth faltering across the board, as weak domestic demand persisted and Beijing intensified efforts to curb excess capacity.
Retail sales last month rose 3.7% from a year earlier, data from the National Bureau of Statistics showed Friday, sharply missing analysts’ estimates for a 4.6% growth in a Reuters poll and slowing from June’s 4.8% growth.
Industrial output rose 5.7% from a year ago in July, its weakest level since November last year, according to LSEG data, and weaker than analysts’ expectations for a 5.9% rise.
Fixed-asset investment expanded 1.6% in the January to July period, undershooting economists’ forecasts for a 2.7% growth and slowing from 2.8% in the first six months. Within that segment, the contraction in property investment worsened, slumping 12% in the first seven months, government data showed.
The statistics bureau attributed the disappointing economic performance to the “ongoing challenges from the complex and unpredictable external environment” and extreme weather. High temperatures, heavy rains and flooding hit several regions across the country last month, forcing factories and construction sites to suspend operations.
According to Goldman Sachs’ estimates, in July alone, investments in fixed assets dropped 5.2% year-over-year, the sharpest decline since March 2020 when the country grappled with the pandemic outbreak.
The government appears “less pressured to step up spending” given the solid growth in the first half-year, said Lisheng Wang,China economist at Goldman. The “contractionary effect” of the ongoing ‘anti-involution’ policies may have gradually kicked in,” Wang added, referring to Beijing’s recent push to rein in the excessive and unsustainable price wars among businesses.
This year, Chinese authorities intensified scrutiny over excessive production in sectors like steel and coal in a bid to curb cutthroat competition that has weighed on businesses’ profitability and worsened deflation.