China Sees Investment Slump in July Despite Stronger Exports

China Sees Investment Slump in July Despite Stronger Exports

Beijing, August 15, 2025 – China’s economic momentum slowed sharply in July, despite a better-than-expected export performance. Key indicators — including fixed asset investment (FAI), retail sales, and industrial production — all weakened, pointing to deteriorating domestic demand, according to a report by Standard Chartered economists.

The decline in investment extended beyond the struggling property sector, with property investment contracting by an estimated 17% year-over-year. Notably, FAI in both manufacturing and infrastructure also recorded annual declines — the first time this has occurred since 2021.

The report suggests that adverse weather conditions may have disrupted construction activity, while recent policy efforts to manage industrial capacity could have weighed on equipment-related capital expenditure.

Retail performance also disappointed, as consumer goods sales contracted month-on-month for the second consecutive month, indicating weaker household consumption. Temporary boosts from trade-in incentives and June’s online shopping promotions appear to have faded.

However, the services sector remained a stabilizing force. Services-related retail sales grew 5.2% year-on-year in the first seven months of 2025, while the services production index rose 5.8% — helping to offset some of the downward pressure on overall GDP.

Interestingly, trade data beat expectations, largely due to export front-loading ahead of U.S. reciprocal tariffs that came into effect in early August.

Despite the broad-based slowdown, Standard Chartered does not expect an immediate shift in economic policy, but rather an acceleration in the implementation of already announced support measures.