China's July data points to a deepening slowdown, prompting calls for policy support

Data from the National Bureau of Statistics revealed that July's industrial output grew 4.5% from a year earlier, slower than June's 5.3% increase and below one outlet's poll forecast of 4.8%. Retail sales rose merely 0.6%, a decline from June's 1% rise and short of the 1.5% expected by forecasters. The agency cited high temperatures and heavy rainfall as factors disrupting supply and demand.

Premier Li Qiang told the State Council that insufficient domestic demand remains a key problem and urged the government to stabilise external demand and expand mutually beneficial trade. He suggested that bolstering overseas demand could offset weak internal consumption. Capital Economics' Julian Evans-Pritchard noted that AI-related capital spending continues to support manufacturing and that the slowdown partly reflects temporary weather disruptions, expecting modest growth later in the year aided by fiscal loosening. The latest numbers follow a quarterly GDP growth of 4.3% for the three months to June, one of the lowest on record.