China’s Economy Shows Signs of Summer Slowdown
A broad slowdown hit the world’s second-largest economy as trade uncertainties loom and the property sector weakened.
SINGAPORE—Signs of weakness in China’s economy stretched into August, adding pressure on Beijing to step up efforts to stimulate near-term growth.
Momentum in retail sales, industrial production and investment all slowed, while unemployment ticked up and the housing market continued to struggle, according to data released Monday by the National Bureau of Statistics. China also recently reported slowing export growth and persistent deflation for August.
Taken together, the data suggest the world’s second-largest economy is showing some fatigue after expectation-defying growth earlier this year. They also signal that China’s so-called anti-involution campaign to rein in extreme competition may be starting to curb excess production and overinvestment.
Economists and policy advisers have been calling for Beijing to rebalance the economy to be driven more by consumption, with China’s reliance on exports and investments to drive growth increasingly challenged by global trade tensions and slowing productivity gains.
The fate of one of China’s most important trade relationships remains unclear, with U.S. and Chinese negotiators meeting in Madrid for the latest round of trade talks.
Still, some analysts believe Beijing may hold off on major initiatives to stimulate household spending as long as it remains on track for its target of around 5% economic growth this year.
China’s economy expanded an annual 5.3% in the first half of the year, driven by surprisingly strong exports, according to government data. But economists expect growth to slow the rest of the year as U.S. tariffs hit global trade and the boost from inventory stockpiling runs out.
The main effort to boost spending so far has been a consumer goods trade-in program offering subsidies for purchases of items such as household appliances and electric vehicles. That has helped drive retail sales since the program was rolled out last year, but could be running out of road since consumers only buy big-ticket items so often.
Retail sales increased 3.4% from a year ago in August, according to the government data, down from 3.7% growth in July and below economists’ 4.0% forecast.
Household demand has been weak in recent years as a prolonged property market downturn and worries about the economic outlook have pushed consumers to save money and watch their spending. Meanwhile, many industries are dealing with hypercompetition and price wars, especially in industries championed by China’s leaders such as solar energy and EVs.
Beijing’s recent drive to curb excess capacity in key industries and this summer’s adverse weather conditions—high temperatures, heavy rain and flooding—have weighed on factory activity and cut into industrial production, economists say.
China’s industrial production rose 5.2% last month, compared with 5.7% in July and a 5.8% projection by economists. Fixed asset investment increased 0.5% in the first eight months of the year, compared with a 1.6% year-over-year rise in the January-to-July period and expectations for 1.3% growth.
The yearslong property slump is another factor denting investment, say analysts. Property investment fell 12.9% between January and August, worsening from a 12.0% decline in the first seven months. New home sales by value fell 7.0% in the first eight months, widening from a 6.2% drop in the first seven months.
Average home prices in the major 70 Chinese cities fell 3.0% from a year earlier in August, compared with a 3.4% decline in July, according to calculations by The Wall Street Journal based on the statistics bureau data.
China’s urban surveyed unemployment rate came in at 5.3% last month, edging up July’s 5.2%, as millions of fresh college graduates entered the job market. Earlier, China reported its export growth slowed in August to 4.4% year-over-year, the slowest pace in six months.
Meanwhile, factory-gate prices have been in contraction for nearly three years, with producer prices dropping 2.9% on year in August. Consumer prices have hovered around the flatline.
Xiao Xiao and Grace Zhu contributed to this article.
Write to Hannah Miao at hannah.miao@wsj.com
SINGAPORE—Signs of weakness in China’s economy stretched into August, adding pressure on Beijing to step up efforts to stimulate near-term growth.
Momentum in retail sales, industrial production and investment all slowed, while unemployment ticked up and the housing market continued to struggle, according to data released Monday by the National Bureau of Statistics. China also recently reported slowing export growth and persistent deflation for August.
Taken together, the data suggest the world’s second-largest economy is showing some fatigue after expectation-defying growth earlier this year. They also signal that China’s so-called anti-involution campaign to rein in extreme competition may be starting to curb excess production and overinvestment.
Economists and policy advisers have been calling for Beijing to rebalance the economy to be driven more by consumption, with China’s reliance on exports and investments to drive growth increasingly challenged by global trade tensions and slowing productivity gains.
The fate of one of China’s most important trade relationships remains unclear, with U.S. and Chinese negotiators meeting in Madrid for the latest round of trade talks.
Still, some analysts believe Beijing may hold off on major initiatives to stimulate household spending as long as it remains on track for its target of around 5% economic growth this year.
China’s economy expanded an annual 5.3% in the first half of the year, driven by surprisingly strong exports, according to government data. But economists expect growth to slow the rest of the year as U.S. tariffs hit global trade and the boost from inventory stockpiling runs out.
The main effort to boost spending so far has been a consumer goods trade-in program offering subsidies for purchases of items such as household appliances and electric vehicles. That has helped drive retail sales since the program was rolled out last year, but could be running out of road since consumers only buy big-ticket items so often.
Retail sales increased 3.4% from a year ago in August, according to the government data, down from 3.7% growth in July and below economists’ 4.0% forecast.
Household demand has been weak in recent years as a prolonged property market downturn and worries about the economic outlook have pushed consumers to save money and watch their spending. Meanwhile, many industries are dealing with hypercompetition and price wars, especially in industries championed by China’s leaders such as solar energy and EVs.
Beijing’s recent drive to curb excess capacity in key industries and this summer’s adverse weather conditions—high temperatures, heavy rain and flooding—have weighed on factory activity and cut into industrial production, economists say.
China’s industrial production rose 5.2% last month, compared with 5.7% in July and a 5.8% projection by economists. Fixed asset investment increased 0.5% in the first eight months of the year, compared with a 1.6% year-over-year rise in the January-to-July period and expectations for 1.3% growth.
The yearslong property slump is another factor denting investment, say analysts. Property investment fell 12.9% between January and August, worsening from a 12.0% decline in the first seven months. New home sales by value fell 7.0% in the first eight months, widening from a 6.2% drop in the first seven months.
Average home prices in the major 70 Chinese cities fell 3.0% from a year earlier in August, compared with a 3.4% decline in July, according to calculations by The Wall Street Journal based on the statistics bureau data.
China’s urban surveyed unemployment rate came in at 5.3% last month, edging up July’s 5.2%, as millions of fresh college graduates entered the job market. Earlier, China reported its export growth slowed in August to 4.4% year-over-year, the slowest pace in six months.
Meanwhile, factory-gate prices have been in contraction for nearly three years, with producer prices dropping 2.9% on year in August. Consumer prices have hovered around the flatline.
Xiao Xiao and Grace Zhu contributed to this article.
Write to Hannah Miao at hannah.miao@wsj.com
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