Economic Indicators Turn Lower
China’s economy lost momentum in July as U.S. tariffs and intense price competition began to take a visible toll. Official data showed weaker growth in industrial production, retail sales, and fixed-asset investment compared to earlier in the year, while the property sector’s downturn deepened. Urban unemployment rose more than expected.
Analysts say the slowdown follows a stronger start to the year that allowed policymakers to hold back on major new stimulus. Leaders have signaled they will maintain planned support measures but are prepared to introduce additional aid if conditions worsen.
Tariff-Linked Weakness
Economists cited the direct impact of recent U.S. trade measures.
“July’s main economic indicators suggest that the country’s tariff-related downturn has begun,” said Homin Lee, senior macro strategist at Lombard Odier in Singapore.
The government is expected to closely monitor incoming data before deciding whether to expand stimulus efforts later in the year.
Regional and Global Developments
- India: Prime Minister Narendra Modi criticized U.S. trade policy in an Independence Day speech, calling for greater self-sufficiency in energy, critical minerals, technology, and defense. He also announced a sales tax cut to support domestic demand.
- Japan: GDP grew at an annualized rate of 1% in the second quarter, more than double analyst forecasts. A revised figure for the previous quarter showed 0.6% growth instead of a contraction, increasing speculation about a possible Bank of Japan rate hike later this year.
- Indonesia: President Prabowo Subianto reaffirmed his anti-corruption agenda and pushed forward with state-led development initiatives modeled on China’s rapid growth approach.
Corporate and Market Highlights
- SoftBank: Founder Masayoshi Son saw his net worth rise by $11 billion in August as SoftBank shares hit record highs, buoyed by AI-related investments and gains from asset sales.
- Berkshire Hathaway: Warren Buffett’s company disclosed a $1.6 billion stake in UnitedHealth, lifting the insurer’s stock in after-hours trading.
- Hong Kong Dollar: The currency reached a three-month high against the U.S. dollar, suggesting that sustained central bank interventions are beginning to stabilize its position.
- Gina Rinehart: Australia’s wealthiest person increased her holding in Truth Social by 67% and benefited from gains in rare earth producer MP Materials.
Outlook
China’s policymakers face the challenge of sustaining growth while managing the effects of trade tensions and structural economic weaknesses. The government is expected to rely on a mix of targeted fiscal support and monetary policy adjustments in the coming months, while global markets watch for signs of further deceleration or recovery.
Related Coverage
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