BEIJING, Aug 15 (Reuters) — China’s factory output growth slumped to an eight-month low in July, while retail sales slowed sharply, raising pressure on policymakers to roll out more stimulus to revive domestic demand and ward off external shocks to the $19 trillion economy.
The underwhelming indicators come as officials navigate pressure on multiple fronts ranging from US President Donald Trump’s trade policies to extreme weather, excessive competition in the domestic market, and chronic weakness in the property sector.
Industrial output grew 5.7 percent year-on-year in July, National Bureau of Statistics (NBS) data showed on Friday, the lowest reading since November 2024, and compared with a 6.8 percent rise in June. It missed forecasts for a 5.9 percent increase in a Reuters poll.
Retail sales, a gauge of consumption, expanded 3.7 percent in July, the slowest pace since December 2024, and cooling from a 4.8 percent rise in the previous month. They missed a forecast gain of 4.6 percent.
A temporary trade truce reached between China and the United States in mid-May, which was extended by another 90 days this week, has prevented US tariff rates on Chinese goods from returning to prohibitively high levels. However, Chinese manufacturers’ profits continue to take a hit from subdued demand and factory-gate deflation at home.
“The economy is quite reliant on government support, and the issue is those efforts were ‘front-loaded’ to the early months of 2025, and by now their impact has somewhat faded out,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
That policy support has helped the world’s second-largest economy avoid a widely anticipated sharp slowdown, along with factories taking advantage of the US-China trade truce to front-load shipments, but analysts say weak demand at home and global risks will drag on growth in coming quarters.
