Bloomberg reports that China’s economy slowed sharply in July due to weak investment, soft consumer demand, and rising US tariffs. The downturn raises expectations for more stimulus as Beijing tries to maintain its 5% growth target amid trade war pressures and fading export momentum. They write:
China’s economy clocked its deepest slowdown of the year in July, raising expectations for Beijing to roll out more stimulus this year to offset the impact of Donald Trump’s trade war.
A campaign to curb overcapacity at home is adding to the sting of higher tariffs. Fixed-asset investment fell the most since Covid erupted in early 2020, with industrial activity growth the weakest in eight months — a sign that a front-loading factory boom to get ahead of US duties of more than 50% is waning. […]
“It does seem like the US tariffs are just starting to bite,” said Duncan Wrigley, chief China economist at Pantheon Economics. “Domestic demand is sluggish, but don’t underestimate China’s preparations for a protracted trade war. They have been holding back support measures to use for if and when exports really start to slow.”[…]
“Economic activity in the first half exceeded expectations, driven by the front-loading of exports and transshipments,” said Carlos Casanova, senior Asia economist at Union Bancaire Privee in Hong Kong. “However, the second half is likely to reflect a more tempered reality.”
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