China cuts key rates as growth in industrial output and retail sales falls short of forecasts.

China cuts key rates as growth in industrial output and retail sales falls short of forecasts.

China’s Slowdown: Industrial Output and Retail Sales Growth Falter

Beijing, Aug 15 – China’s economic growth showed signs of slowing in July as industrial output and retail sales fell short of expectations. These weak figures have raised concerns among policymakers, indicating the need for additional support measures to revive the faltering economy. In a surprise move, the central bank had already cut key policy rates for the second time in three months, highlighting the urgency to address the rapid loss of the post-COVID economic rebound1.

Disappointing Industrial Output

China’s industrial output grew by 3.7% year-on-year in July, down from the 4.4% pace witnessed in June2. This rate of growth was below expectations and fell short of a poll conducted by ANBLE, which had projected a 4.4% increase3. The decline in industrial output indicates a slowdown in manufacturing and production activities within the country.

Weak Retail Sales

Retail sales, a significant gauge of consumption, rose by a mere 2.5% in July, compared to a 3.1% increase in June4. Despite the onset of the summer travel season, this growth fell short of analysts’ forecasts of 4.5%5. With the gradual recovery from the pandemic-induced lockdowns, the slower growth in retail sales suggests that Chinese consumers may not be spending as much as desired, affecting the overall economic momentum.

The Need for Additional Support

The recent slowdown in China’s economic growth is a cause for concern, and policymakers have already taken some steps to address the situation. Last month, a range of stimulus measures was introduced to boost consumption, including incentives for auto and home appliance purchases, as well as support for the private sector6. However, despite these efforts, the property sector continues to drag down the economy, local government debt remains a challenge, and youth unemployment rates are high. Cooling foreign demand further adds to the hurdles in fostering a sustainable economic revival7.

Tuesday’s data reinforces the need for policymakers to provide more support measures to reinvigorate the economy. This comes in the wake of a series of gloomy economic indicators over the past week, including disappointing trade and consumer price figures, as well as record-low credit growth8.

Property Sector Slump

Investment in the property sector has experienced a drastic decline, shrinking by 8.5% year-on-year in the first seven months of 20239. With the property sector once being a pillar of economic growth in China, this slump is a significant concern. To address this issue, the Politburo, a top decision-making body of the ruling Communist Party, emphasized the need to adapt to market changes and optimize property policies10.

Unemployment Rate

The nationwide survey-based jobless rate in China slightly increased to 5.3% in July, up from 5.2% in June11. This minor rise in unemployment signals potential challenges in the labor market and could further impact consumer spending.


China’s economic growth has hit a roadblock as industrial output and retail sales have fallen short of expectations. Policymakers are faced with the task of implementing additional support measures to stimulate economic recovery and overcome various challenges. With the property sector facing a slump, youth unemployment rates rising, and the global demand cooling, the need for effective policies is more critical than ever.


Note: These figures were reported in Chinese yuan renminbi, with an exchange rate of $1 = 7.2838 Chinese yuan renminbi12.

  1. Source: Reuters↩︎

  2. Source: Reuters↩︎

  3. Source: Reuters↩︎

  4. Source: Reuters↩︎

  5. Source: Reuters↩︎

  6. Source: Reuters↩︎

  7. Source: Reuters↩︎

  8. Source: Reuters↩︎

  9. Source: Reuters↩︎

  10. Source: Reuters↩︎

  11. Source: Reuters↩︎

  12. Source: Reuters↩︎