China’s economy lost further steam in August, with factory output and retail sales both underperforming expectations, raising pressure on Beijing to roll out fresh stimulus as weak consumption and a property slump weigh on growth.According to data from the National Bureau of Statistics (NBS), industrial output rose 5.2 per cent year-on-year in August, slowing from July’s 5.7 per cent increase. The figure fell short of forecasts of 5.7 per cent in a Reuters poll and was the weakest pace since the same month last year.Manufacturing activity was hit by extreme summer weather, with China experiencing its hottest season since 1961 compounded by the longest rainy season for the same period, as per Reuters.
Consumer spending weakens further
Retail sales, a key measure of consumer demand, expanded 3.4 per cent in August, down from July’s 3.7 per cent and below expectations of 3.9 per cent. The reading marked the slowest growth since November, highlighting households’ caution as property wealth shrinks and the job market remains subdued.Households have tightened spending amid shrinking real estate wealth, while business confidence has faltered and the labour market weakened.
Government cautions on risks ahead
The NBS said the economy was “generally stable” in August but admitted that “many unstable and uncertain factors in the external environment” remained. “The economy is confronted with multiple risks and challenges,” spokesperson Fu Linghui cautioned, according to the South China Morning Post. He added that policymakers must “fully implement macro policies” and focus on stabilising jobs, businesses, markets and expectations.Official data also showed that the overall urban unemployment rate edged up to 5.3 per cent in August, compared with 5.2 per cent in July.
Property slump deepens
The property downturn continued to be a major drag. Official data showed new home prices slipped 0.3 per cent month-on-month in August and 2.5 per cent from a year earlier. Property investment between January and August dropped 12.9 per cent compared with the same period last year, extending a 12 per cent fall in the first seven months, the SCMP reported. New home sales by floor area were also down 4.7 per cent in the first eight months of 2025.
Beijing pushes stimulus measures
With household wealth eroded and consumer confidence low, Beijing has been trying to stimulate spending. A year-long subsidy plan was unveiled last month to cover interest on personal consumer loans, while a trade-in programme for home appliances has boosted sales, though some provinces have already suspended parts of the scheme due to funding shortages, according to the SCMP.
Exports lose momentum
Externally, exports also lost momentum. Goods shipments recorded the slowest growth in six months in August, with exports to the United States plunging more than 33 per cent despite the current tariff truce, the SCMP reported.Producers on both sides of the Pacific are watching to see if the two largest economies can navigate a path beyond the truce.
Investment activity falters
Investment activity weakened further, with fixed-asset investment rising only 0.5 per cent in the first eight months of 2025, down from 1.6 per cent in January to July, and well below expectations of a 1.4 per cent increase, Reuters reported.Zheng Shanjie, head of China’s state planner, pledged last week that Beijing would make “full use of fiscal and monetary policies” to help meet its annual growth goal of around 5 per cent. He also promised to fast-track new financial tools in the second half of the year.
