China’s investment contraction worsened and retail sales growth slowed in August, while industrial production exceeded expectations, highlighting persistent domestic challenges tied to weak demand, the National Bureau of Statistics said.
Retail sales rose 0.4% from a year earlier in August, down from 0.6% in July and below economists’ forecast for 0.8% growth in a Reuters poll.
Industrial output expanded 5.2% last month, up from 4.5% in July and ahead of expectations for a 4.8% increase.
Urban fixed-asset investment, which includes property and infrastructure spending, contracted 7.2% from a year earlier during the first eight months of the year. That deepened from a 6.7% decline in January-July and matched analysts’ expectations.
The urban survey-based unemployment rate edged up to 5.3% in August from 5.2% in July.
The statistics bureau warned that adverse effects from the external environment had intensified. It described a sharp domestic imbalance between strong supply and weak demand and said some companies continued to face operating difficulties.
The NBS called for stronger macroeconomic policy adjustments, measures to stimulate domestic demand and industrial upgrading to support innovation-led growth.
Growth in the world’s second-largest economy slowed to 4.3% in the second quarter, its weakest pace in more than three years and well below Beijing’s annual target of 4.5% to 5%. Policymakers have so far relied on incremental support rather than more aggressive stimulus.
Resilient exports have supported the economy as a global artificial-intelligence investment boom increases demand for Chinese semiconductors and technology hardware. China’s large oil reserves have also helped cushion the impact of rising energy prices, allowing the world’s largest crude importer to reduce purchases.
China’s official manufacturing purchasing managers’ index showed that both new orders and output returned to expansion in August after contracting in July.
Efforts to encourage borrowing have nevertheless fallen short. Credit growth in August came in well below expectations, as government bond financing failed to compensate for weak demand from companies and households.
New bank loans increased by only 60 billion yuan ($8.95 billion), compared with a forecast of roughly 400 billion yuan and a decline from 590 billion yuan a year earlier. Growth in outstanding loans slowed to a record low of 4.9%.
Raymond Yeung, China economist at ANZ Research, said earlier this month that September could offer an important policy window to restore business confidence ahead of the October Golden Week holidays. He said additional fiscal support was needed but that a policy-rate cut remained unlikely.