China’s July 2025 economic growth slumps: Retail sales and industrial output below expectations

China’s economy lost momentum in July, with growth faltering across the board, as weak domestic demand persisted and Beijing intensified efforts to curb excess capacity.

Retail sales last month rose 3.7 per cent from a year earlier, data from the National Bureau of Statistics showed Friday, sharply missing analysts’ estimates for a 4.6 per cent growth in a Reuters poll and slowing from June’s 4.8 per cent growth.

Industrial output rose 5.7 per cent from a year ago in July, its weakest level since November last year, according to LSEG data, and weaker than analysts’ expectations for a 5.9 per cent rise.

Fixed-asset investment in July expanded 1.6 percent for the year-to-date, undershooting economists’ forecasts for a 2.7 per cent growth and slowing from 2.8 per cent in the first six months.

Within that segment, the contraction in property investment worsened, slumping 12 per cent in the first seven months, government data showed.

Separately, China’s survey-based urban unemployment rate in July came in at 5.2 per cent, edging higher after remaining at 5 per cent in May and June.

Unemployment rate for those aged between 16 and 24, excluding college students, however, has remained above 14 per cent for a year.

The latest slowdown was expected, as major contributors to the outperformance in the first half of the year, such as government stimulus and pre-emptive trade, are fading out, said Tianchen Xu, senior economist at Economist Intelligence Unit.

China’s economy expanded 5.3 per cent in the first half of the year, on track to meet Beijing’s growth target of 5 per cent. However, economists warned that risks of full-year growth undershooting its target remain, calling for fresh policy support in the second half of the year.

Beijing and Washington on Monday announced that they would extend the tariff pause for another 90 days until mid-November, averting the steep tariffs and allowing more time for both sides to negotiate a durable deal.

Despite the temporary truce, “core disputes — from tech access and critical minerals to industrial policy and geopolitical alignments — remain unresolved,” said Jing Qian, co-founder and managing director of the Center for China Analysis at the Asia Society Policy Institute.

Qian, who advised both governments during the ongoing negotiations, said the “big political trade-offs” are being reserved for a potential summit between US President Donald Trump and his Chinese counterpart Xi Jinping in the coming months.