Friday’s economic update from Beijing revealed a growing sense of unease: In July, industrial production climbed just 5.7% year-over-year, marking its weakest performance since late last year, and trailing both June’s 6.8% gain and analyst expectations. At the same time, retail spending lost momentum too—rising only 3.7%, the slowest pace since December, and well under projections.
These weak readings highlight the squeeze China faces—from dimming domestic demand to aggressive price competition and sustained deflationary pressures. Manufacturing margins remain under strain as producer prices slide, while households are increasingly cautious amid falling property values.
Meanwhile, investment in fixed assets—often tied closely to the property sector—grew only 1.6% over the first seven months of the year. This sluggish pace reflects continued uncertainty and caution among businesses and local developers.
Although a temporary truce with the U.S. has eased tariff pressures, it hasn’t sparked a notable rebound in consumption. As a result, economists are adjusting their outlook downward: GDP growth is expected to moderate to around 4.5% in Q3 and potentially slip to 4.0% in Q4. This puts the government's aspirational 5% annual growth goal increasingly out of reach. Full-year growth is now seen hovering near 4.6%, with risks deepening into 2026.
Markets responded with caution: a brief rally in Chinese stocks reflected hope for additional stimulus measures, but analysts warned that current efforts may not be enough to counteract weakening confidence and persistent structural headwinds. The July figures make clear that the path to a strong and lasting recovery remains fragile—unless Beijing steps up new demand-driven strategies, the economic slowdown could deepen in the months ahead.
No comments:
Post a Comment