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China’s industrial output and retail sales showed signs of weakness in August, indicating a loss of momentum in the economy. This has raised expectations that Beijing will implement additional stimulus measures in the coming months.
In August, industrial output grew at its slowest pace since March, while retail sales, a key indicator of consumption, also experienced a slowdown. Despite August being a summer holiday month, the data from the National Bureau of Statistics revealed these concerning trends.
The NBS stated that while the economy was operating smoothly in August, it still faced challenges in its recovery due to adverse external conditions and insufficient domestic demand.
Industrial output increased by 4.5 percent year-on-year, lower than the 5.1 percent growth in July. Similarly, retail sales rose by 2.1 percent compared to the previous year, down from 2.7 percent in July.
President Xi Jinping’s recent call for officials to meet the country’s economic development goals has been interpreted as a push to achieve this year’s GDP growth target of 5 percent. Xi has emphasized the importance of high-tech manufacturing to counteract the impact of a property downturn on consumption and investor confidence.
Analysts have noted a significant slowdown in China’s growth momentum in recent months, with expectations that the authorities will introduce a stimulus package to boost the economy.
Other data from August indicated a slowdown in fixed asset investment and a continued decline in the housing market. While real estate investment fell, infrastructure and manufacturing investments saw modest growth.
Despite the challenges, the government has only announced incremental measures to stabilize the housing market and boost household demand.
Analysts have warned of the risks posed by China’s two-speed economy, with tensions rising due to the lack of domestic demand and increasing export volumes. Goldman Sachs highlighted the potential impact of new tariffs on China’s growth and suggested the need to stimulate domestic demand to mitigate these risks.