China’s Economic Slowdown Weighs on Retail and Industrial Sectors

China's economy showed clear signs of deceleration in July, with industrial output growth slowing to 5.7% year-on-year from June's 6.8%. Retail sales expanded at their weakest pace this year at just 3.7%, while fixed asset investment grew a mere 1.6% during the first seven months. The property sector's deepening slump—with new home prices down 10.7% from peak levels—has become a critical drag on consumer confidence and spending.

Extreme weather events and lingering U.S. tariff uncertainties compounded the challenges, though increased exports to Southeast Asia and Africa partially offset losses in American markets. Manufacturers remain hesitant, with many delaying investments and hiring decisions pending clarity on trade negotiations. This marks a continuation of the growth momentum erosion observed over recent months, intensifying calls for additional policy support.

The real estate downturn has created a vicious cycle: falling property values—the primary store of wealth for most households—depress consumer spending, which in turn weakens retail growth. With residential investment down nearly 11% year-to-date and no clear price floor in sight, policymakers face mounting pressure to break this negative feedback loop.