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Mia Nurmamat

Xinyi Wu

China’s economy came under further pressure in August, as sluggish investment and consumption highlighted persistently weak domestic demand, although analysts expect a rebound in the fourth quarter as state intervention begins to take effect.
Retail sales, a major gauge of consumer spending, grew last month by 0.4 per cent year on year, according to data released by the National Bureau of Statistics (NBS) on Tuesday.
The reading was lower than a 0.73 per cent rise forecast by economists surveyed by Chinese financial data provider Wind, and was down from the 0.6 per cent increase in July.
Overall fixed-asset investment – covering major areas such as infrastructure, manufacturing and property construction – fell by 7.2 per cent in the January-August period, year on year, largely in line with a Wind forecast of a 7.19 per cent decline.
The drop widened from the 6.7 per cent decline recorded in the first seven months of 2026.
Industrial output, meanwhile, grew by 5.2 per cent in August, up from the 4.5 per cent increase seen in the previous month.
Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered, said economic conditions marginally improved from July to August.


“If the current improvement continues, and proceeds from government bond issuance are fully deployed alongside sustained and faster fiscal spending, the economy is likely to perform better in the fourth quarter than in the third,” Ding said.
“On this basis, we maintain our full-year growth forecast at 4.6 per cent.”
The country’s economy has experienced a prolonged imbalance, with resilient exports supporting industrial activity while weak consumption and investment, coupled with a prolonged property downturn and labour market pressures, weigh on domestic demand.
Economic growth slowed to 4.3 per cent in the second quarter, down from 5 per cent in the first, marking the slowest quarterly expansion since late 2022.
Wang Guanhua, spokeswoman for the NBS, said that investment had been hindered by this year’s adverse weather, as well as companies adopting a more cautious approach as the economy transitioned towards new growth drivers.
She noted that investment had shifted from a focus on scaled expansion to technological innovation, and that the roll-out of local government special-purpose bonds was accelerating.
China’s top economic planner, the National Development and Reform Commission, has held a series of meetings in the past month calling to speed up major construction projects and accelerate the disbursement of fiscal funds to boost investment.

Xu Tianchen, an economist at the Economist Intelligence Unit, said the August data was perhaps a mark of an “intra-year bottom” for China’s economy, with growth likely to rebound in September as stronger government support for public investment began to take effect.
“The impact on investment should start to emerge in September and become more visible in the fourth quarter,” Xu said, adding that a favourable base effect would also support growth.
“I do not think additional stimulus is necessary, as the full-year growth target of 4.5 to 5 per cent remains within reach.”
Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said China’s economy remained uneven, with resilient industrial production contrasting with rising unemployment and weak consumption and investment.
“So far, there is no clear sign of stronger fiscal spending yet,” Zhang said. “The economy faces downside risks in the third quarter, as fiscal support takes time to be implemented and transmitted to the economy.”
Property investment, a persistent drag on economic growth, fell 19.9 per cent in the first eight months of the year, compared with a 19.2 per cent decline between January and July.
Sales of new homes by floor area contracted by 12.1 per cent between January and August, following an 11.8 per cent drop in the first seven months.
China’s surveyed urban unemployment rate stood at 5.3 per cent in August, compared with 5.2 per cent in July.
Zhang Yuhan, principal economist at the Conference Board’s China Centre, said the August data suggested China was becoming increasingly reliant on technological upgrades, productivity gains and overseas demand to absorb its expanding industrial capacity, as domestic consumption and investment remained weak.
“China’s domestic slowdown and the globalisation of Chinese industrial capacity are increasingly two sides of the same story – with potentially important implications for outbound investment, trade relations and manufacturing competition globally,” Zhang said.


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Economy

China Economy

Economic Indicators

The drop in overall fixed-asset investment widened last month, as retail sales grew 0.4 per cent year on year


The drop in overall fixed-asset investment widened last month, as retail sales grew 0.4 per cent year on year.


China’s economy under further pressure in August, as analysts expect rebound next quarter

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}The drop in overall fixed-asset investment widened last month, as retail sales grew 0.4 per cent year on year

The drop in overall fixed-asset investment widened last month, as retail sales grew 0.4 per cent year on year