China’s economy lost momentum for another month in a row, with fresh data showing a deeper-than-expected slowdown and a sharp pullback in investment.

The figures raise the odds that Beijing will add support to keep growth on course for its target, increasing the chance authorities will deploy extra steps to steady activity.

The National Bureau of Statistics (NBS) said that industrial output, covering mines and factories, rose 5.2% in August compared with the previous year. That was weaker than July’s 5.7% increase and below the 5.6% median forecast in a Bloomberg survey. Furthermore, China’s consumer prices fell 0.4% in August, according to an earlier report by Cryptopolitan.

The NBS said “the economy was generally stable” in August, but added that “there are still plenty of instabilities and uncertainties with the external environment, and the economy still faces many risks and challenges.”

Household demand also softened. Retail sales grew 3.4% year over year in August, missing expectations for a 3.8% gain and easing from 3.7% in July. Fixed-asset spending for January to August expanded by just 0.5%. The surveyed urban jobless rate edged up to 5.3%.

“This confirms a sharp slowdown in the second half of 2025, especially on the investment side,” said Carlos Casanova, senior Asia economist at Union Bancaire Privée in Hong Kong.

Economists expect the economy to slow down for the remaining year

With an earlier surge in exports fading, many analysts and investors now expect growth to downshift in the closing months of 2025 after the Chinese economy expanded 5.3% in the first half.

The scale of any cooling in China, set to remain the biggest driver of global growth from 2025 – 2030, matters for a world economy already under strain from Trump’s tariffs.

Even so, the upbeat results in the first six months have left Chinese leaders confident they can still achieve the official goal of “around 5%,” even if momentum weakens later this year.

So far, officials haven’t shown any serious signs of preparing a large stimulus package as exports continue to hold up amid Trump’s 2nd trade war. Yet pressures are building, judging by a run of disappointing numbers in recent weeks.

A broad measure of credit growth slowed in August for the first time this year. Exports also came in below forecasts, with growth slipping to 4.4% last month. Labor-market signals have softened, too, according to purchasing managers’ indexes and private surveys.

Another challenge is the government’s “anti-involution” drive, meant to curb overcapacity and cut back excessive competition among firms. The push, which ramped up in early July, may have contributed to July’s output declines in products from steel to copper.

While stock prices have climbed on hopes that the measures will boost profitability, they also risk damping hiring and household spending unless matched by stronger demand-side support. How the campaign plays out remains uncertain, making it difficult to tell when China might break entrenched deflationary pressures.

Housing prices in China fell in August

Housing adds to the strain. Official figures show new-house prices decreased 0.3% in August from July, the same monthly drop as in July, extending a weak streak that began in May 2023.

Compared with a year earlier, prices fell 2.5% in August, moderating from a 2.8% decline in July. The property downturn began in 2021, and multiple rounds of relief, including mortgage-rate cuts and a program to renovate urban villages, have yet to deliver a lasting turn.

The sustained weakness in demand means the housing market remains a drag on growth. Price declines were widespread. Of the 70 cities surveyed by the NBS, 57 reported decreases month-on-month, and 65 saw year-on-year declines.

Prices for existing homes also weakened. Tier-one cities posted a 3.5% drop from a year earlier, prices in tier-two cities fell 5.2%, and tier-three cities were down 6.0%.

Separate figures highlighted the industry’s slump. Property investment tumbled 12.9% year over year in the January–August period, while property sales by floor area fell 4.7%.