On September 15, China's National Bureau of Statistics released August economic data, revealing a slight contraction in both supply and demand indicators, with domestic demand showing a relatively notable decline. Moving forward, it will be necessary to strengthen macroeconomic policy adjustments, effectively unleash domestic demand potential, deepen reform and opening-up, strengthen the domestic circulation, and promote the dual circulation of domestic and international markets.
China's August economic data showed that some economic indicators experienced slower growth. In August, total retail sales of consumer goods reached 3.97 trillion yuan, growing 3.4% year-on-year, a deceleration of 0.3 percentage points from the previous month. From January to August, total retail sales of consumer goods reached 32.39 trillion yuan, up 4.6% year-on-year.
Regarding investment, cumulative fixed asset investment from January to August grew 0.5% year-on-year, slowing by 1.1 percentage points compared to the first seven months. Excluding real estate development investment, national fixed asset investment growth declined by 1.1 percentage points to 4.2%.
As "anti-involution" policies continue to deepen, positive signals are emerging in the industrial sector. In August, the Producer Price Index (PPI) fell 2.9% year-on-year, with the decline narrowing by 0.7 percentage points from the previous month. Month-on-month, PPI remained flat, ending eight consecutive months of negative growth.
Fu Linghui, spokesperson and chief economist of the National Bureau of Statistics, stated at a State Council Information Office press conference that in the next phase, it is necessary to strengthen macroeconomic policy adjustments, effectively unleash domestic demand potential, deepen reform and opening-up, strengthen domestic circulation, promote dual circulation, and drive stable and healthy economic development. August economic operations remained generally stable with solid progress in high-quality development. However, the external environment remains complex and severe with many unstable and uncertain factors, domestic market conditions show strong supply but weak demand, and some enterprises face operational difficulties.
Tao Chuan, Chief Economist at Minsheng Securities Research Institute, noted that August economic data exhibited characteristics of "slow industry, weak investment, and tepid consumption." Although from a growth rate perspective, the transition between new and old economic drivers still shows substance, and industrial production (5.2%) and the service industry production index (5.6%) indicate that GDP growth in the third quarter remains around 5%, the economic weakening in Q3 is mainly reflected in the "stalling" risk of fixed asset investment due to the combined impact of severe weather, tariff uncertainties, and "anti-involution" policies. Considering youth unemployment issues and the waning effects of consumption subsidies, expectations for a new round of policy easing are likely to continue warming, especially as policy financial instruments are about to be implemented, making fiscal and monetary policy coordination in Q4 more focused on "stabilizing investment" and "promoting consumption."
**Consumption: Retail Sales Growth Slows, CPI Declines**
In August, total retail sales of consumer goods grew 3.4% year-on-year, below market expectations of 3.8%, slowing 0.3 percentage points from the previous month to reach the lowest point in 2025, facing certain downward pressure.
Driven by the "trade-in" policy for consumer goods, key commodity sales still achieved rapid growth. In August, retail sales of furniture, household appliances and audio-visual equipment, cultural and office supplies, and communication equipment by enterprises above designated size grew 18.6%, 14.3%, 14.2%, and 7.3% respectively. However, the effect of the "trade-in" policy is diminishing, with most "trade-in" categories beginning to show slower growth.
Compared to goods retail, service consumption became a highlight. Due to hot summer consumption, related service consumption maintained good momentum. In August, national box office revenue and audience numbers grew 48.6% and 66.9% year-on-year respectively. From January to August, service retail sales grew 5.1%, with market sales showing continued expansion, faster than goods retail sales growth.
Fu Linghui stated that under the combined effect of various consumption promotion policies, commodity consumption in August remained basically stable, service consumption showed strong resilience, new types of consumption continued to grow, market space is still expanding, and the trend of consumption expansion has not changed. However, residents' consumption capacity and confidence still need improvement, and the endogenous momentum of consumption needs strengthening. In the next phase, consumption enhancement special actions should be better implemented, employment should be stabilized and income increased, consumption environment improved, quality supply increased, consumption potential better unleashed, and stable development of the consumer market promoted.
Notably, the Consumer Price Index (CPI) in August fell from 0 to -0.4% year-on-year, and from 0.4% to 0 month-on-month.
Dong Lijuan, Chief Statistician of the National Bureau of Statistics' Urban Department, explained that the CPI year-on-year decline was mainly due to higher comparison base from the same period last year combined with the drag from food prices. Food prices fell 4.3% year-on-year in August, with pork, fresh vegetables, and egg prices declining 16.1%, 15.2%, and 14.2% respectively, with expanding declines pulling down CPI.
Statistics show that in August, core CPI excluding food and energy prices rose 0.9% year-on-year, expanding 0.1 percentage point from the previous month, marking four consecutive months of expansion and reaching the highest level since February 2024.
**Industry: Overall Slowdown, PPI Ends Consecutive Negative Growth**
In August, the year-on-year growth rate of value-added by industrial enterprises above designated size declined from 5.7% in July to 5.2%, while month-on-month growth also fell from 0.38% to 0.37%. Affected by export decline, high temperatures, and power restrictions, August growth slowed to the lowest since September 2024.
Despite the overall slowdown in industrial production in August, a bright signal was that high-tech industry production showed considerable resilience, with industrial value-added maintaining 9.3% year-on-year growth, while industrial robot and new energy vehicle production continued double-digit growth.
Statistics show that in the first eight months of this year, industrial value-added grew 6.2% year-on-year.
Another positive change came from prices. In August, PPI fell 2.9% year-on-year, with the decline narrowing by 0.7 percentage points from the previous month; month-on-month remained flat, ending eight consecutive months of negative growth.
After the July Politburo set the tone for "anti-involution," a combination of eliminating outdated capacity, industry self-discipline, and unified national market measures has been implemented, with positive changes appearing in prices of some key industrial products. Fu Linghui stated that relevant departments actively promoted industry self-discipline and capacity governance in key industries, with effects gradually emerging. In August, ex-factory prices in coal, steel, new energy vehicles, and photovoltaic industries saw narrowing year-on-year declines, reducing their drag on PPI compared to the previous month, helping price operations return to reasonable ranges.
Dong Lijuan explained that as the construction of a unified national market advances and capacity governance in key industries proceeds orderly, PPI ended eight consecutive months of negative growth. For example, coal processing, ferrous metal smelting and rolling, coal mining and washing, photovoltaic equipment and component manufacturing, and new energy vehicle manufacturing prices saw year-on-year declines narrow by 10.3, 6.0, 3.2, 2.8, and 0.6 percentage points respectively compared to the previous month, which were the main reasons for PPI's narrowing decline.
However, Fu Linghui emphasized that PPI is still in negative territory, which is unfavorable for industrial enterprise operations improvement. In the next phase, domestic demand should be further expanded, unified national market construction advanced, enterprise competition order regulated, and industrial product prices promoted to rise reasonably.
**Investment: Real Estate Drags Investment, Policies Continue Efforts**
In the first eight months of this year, national fixed asset investment slowed to 0.5% year-on-year, below market expectations of 1.5%. On a monthly basis, August fixed asset investment fell 0.2%, with the decline narrowing from July.
Seasonal high temperatures and heavy rainfall put pressure on infrastructure construction in August. Affected by persistent adverse weather (high temperatures and heavy rainfall) in the first half of August, infrastructure investment slowed again, with broad infrastructure growth falling from -2.0% in July to -6.4%, and narrow infrastructure growth declining from -5.1% to -5.9%. Among the three major infrastructure segments, the trigger for expanded infrastructure investment decline in August was water conservancy, environment, and public facilities management, with year-on-year growth falling from -2.8% in July to -5.8%.
However, real estate remains an important factor dragging investment. By sector, infrastructure investment grew 2.0% year-on-year, manufacturing investment increased 5.1%, while real estate development investment declined 12.9%.
Markets noted that from January to August, private investment growth continued declining by 2.3%, with private investment vitality remaining insufficient.
Regarding this, Fu Linghui stated that affected by changes in the international environment and real estate market adjustments, private investment has slowed, but excluding real estate development investment, private project investment remains basically stable. Private fixed asset investment fell 2.3% year-on-year from January to August, including a 16.7% decline in private real estate development investment. Excluding real estate development investment, private project investment grew 3% year-on-year from January to August, faster than overall investment growth.
Since August, cities including Beijing, Shanghai, and Shenzhen have successively introduced comprehensive real estate control policies, including relaxing purchase restrictions in non-core areas and adjusting personal housing credit policies to better meet rigid and diversified improved housing demand. According to Shanghai Housing Administration data, just one week after the "Shanghai Six Measures" new real estate policies were introduced, Shanghai real estate transaction volume grew significantly compared to pre-policy levels, driving August commercial housing transaction volume to turn positive month-on-month. Local banks reported warming residential purchase demand, driving significant growth in mortgage loan consultations and contract signings.
Price changes for commercial residential sales in 70 large and medium cities showed that in August, commercial residential sales prices in all tiers of cities declined month-on-month. Among them, new commercial residential sales price declines in first and second-tier cities narrowed slightly, with expectations for further stabilization and recovery.
Guo Lei, Chief Economist at GF Securities, believes this year's economic driving structure features exports and "two new" sectors providing upward pull, while real estate and local infrastructure create constraints. From data since July, overall export momentum continues, but real estate and infrastructure pressures have intensified, while "two new" sectors face issues of marginal resource decline and rising base effects. Exports face trade environment uncertainties after November, making stabilizing domestic demand key before then. Therefore, policies since August have seen a new round of growth-stabilizing impulses, including accelerated deployment of policy financial instruments, accelerated "two priorities," renewed optimization of real estate policies in Beijing, Shanghai, and Shenzhen, and interest subsidy policies for personal consumption and service industry business entities. Policy effects remain to be closely observed.