By Obinna Uballa
China’s economic slowdown intensified in August, with retail sales, industrial output and investment figures falling short of expectations, underscoring persistent weakness in domestic demand and the drag from Beijing’s clampdown on industrial overcapacity.
Data from the National Bureau of Statistics (NBS) on Monday showed retail sales rising just 3.4% year-on-year, below the 3.9% forecast in a Reuters poll and slower than July’s 3.7%. Industrial output grew 5.2%, down from 5.7% in July and its weakest pace since August 2024, according to LSEG data.
Fixed-asset investment expanded a marginal 0.5% in the January–August period, sharply down from 1.6% in the first seven months and well below the 1.4% consensus forecast. Real estate investment plunged 12.9% in the eight-month period, highlighting the depth of the sector’s crisis.
Manufacturing and utilities investment showed some resilience, climbing 5.1% and 18.8% respectively, largely driven by state-led projects. Private sector investment, however, continued to contract. “Manufacturing growth remains modest and uneven,” said Yuhan Zhang of The Conference Board, noting reliance on policy-driven spending in infrastructure, high-tech, and industrial upgrades.
The survey-based urban jobless rate ticked up to 5.3% from 5.2% in July, which the NBS attributed to graduation season. The bureau warned that “many unstable and uncertain factors” still weigh on the economy, calling for stronger macro policy support to stabilise jobs, businesses, and market expectations.
Consumption was mixed: rural retail sales grew 4.6%, outpacing 3.4% in urban centres. Categories such as gold, silver and jewellery (+16.8%), sports and entertainment products (+16.9%), and furniture (+18.6%) outperformed, while petroleum, tobacco, and alcohol sales lagged. Service spending also picked up, led by travel, leisure and transport.
But consumer inflation pressures remain muted. The CPI fell 0.4% year-on-year in August, while producer price deflation persisted for a third straight year. NBS spokesperson Fu Linghui cautioned that price trends remain volatile, citing risks from a weaker yuan and global commodity costs.
Goldman Sachs economist Lisheng Wang, according to CNBC, warned that consumption growth could slow “more meaningfully” from September due to fading subsidies for consumer goods and unfavourable base effects, calling for “incremental and targeted easing” in coming months.
Despite the weak data, the CSI 300 index gained nearly 1% as markets had already priced in softer third-quarter growth. “The slowdown is not a surprise,” said Zhiwei Zhang of Pinpoint Asset Management, though he added Beijing may only roll out a large-scale stimulus if its 5% growth target looks in jeopardy.
