London, UK – August 18,2025
Recent economic data from China shows a significant slowdown, with indicators across various sectors pointing to a challenging period ahead and raising pressure on Beijing to implement more forceful stimulus measures. The slowdown is the result of a confluence of factors, including a protracted crisis in the property market, weak domestic demand, and mounting external pressures from rising global trade protectionism.
The latest figures from China’s National Bureau of Statistics revealed that industrial output growth slowed in July, while retail sales also saw their weakest growth of the year. This broad-based slowdown underscores the fragility of the post-pandemic recovery and highlights that domestic demand is not picking up fast enough to offset other economic drags. Economists at ING Economics noted that growth in retail sales, fixed asset investment, and industry all hit their lowest levels of the year in July.
At the heart of the malaise is the ongoing crisis in the real estate sector, a major driver of China’s economy for decades. Property investments have plunged, and prices for newly built homes continue to fall in major cities. This prolonged downturn has hit the financial health of local governments and severely impacted household wealth, as a vast majority of Chinese families hold their assets in real estate. The resulting lack of confidence is a key factor crimping consumer spending and contributing to deflationary pressures.
The situation is further complicated by a challenging external environment. Escalating trade tensions, particularly with the US, are weighing on China’s exports, a traditional engine of growth. New tariffs and export restrictions from the US are adding to the pressure, forcing Beijing to re-evaluate its reliance on foreign trade.
In response, Beijing has announced a “moderately loose monetary policy” for 2025 and is focusing on a long-term strategy of shifting the economy toward a more balanced, innovation-led model. The government is pushing for the development of “new quality productive forces” in advanced sectors like AI, semiconductors, and renewable energy. While these policies are aimed at long-term growth and technological self-reliance, critics argue they may not be enough to solve the immediate problem of weak demand and a struggling property market. The lack of a major fiscal stimulus to directly boost consumption has left many economists questioning whether the current approach is sufficient to restore robust growth.
Headline Points
* Broad Slowdown: China’s economy is showing signs of widespread deceleration, with both industrial output and retail sales hitting their lowest growth rates of the year.
* Property Crisis: The protracted real estate downturn is a primary cause, impacting both government revenues and consumer confidence.
* Weak Demand: A key challenge is a lack of strong domestic demand, which is failing to counterbalance other economic headwinds.
* External Pressures: Rising global trade protectionism and new tariffs from the US are adding to China’s economic woes.
* Beijing’s Response: The government is pursuing a “moderately loose monetary policy” and a long-term strategy of investing in high-tech sectors, but it has so far avoided a large-scale fiscal stimulus aimed at consumption.
