China – Economy slows sharply
We have been expecting growth weakness in H2 and July’s data confirms this.
Commerzbank Economic Research
08/15/2025
Data shows domestic weakness despite robust exports
With the exception of exports, July’s real activity, prices, and credit data all point to a visible slowdown in China’s economy. We think there are three key takeaways. First, the difference between the still-decent growth in industrial production and the weakness in retail sales and investment suggests the extent of overcapacity in the economy. Second, the slowdown in retail sales suggests that consumption momentum has remained weak, with the exception of strong consumption seen for the big-ticket items and electronics that were incentivized by the government trade-in program. Third, the decline in investment is concerning.
Details suggest an alarming picture
On the positive side, industrial production grew 5.7% yoy, albeit this is a slowdown from 6.8% in June. But on the demand side things look a lot more concerning. First, nominal retail sales slowed to 3.7% yoy from 4.8% in June and 5.4% in Q2. But this is not the worst.
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