China’s economic activity slowed more than expected in August

China’s economic activity slowed more than expected across the board in August, adding to the likelihood that policymakers will roll out more stimulus to hit the official growth goal, informed Bloomberg.

Industrial output and consumption had their worst month yet this year after a sharp slowdown in July, an underperformance that may heap more pressure on Chinese negotiators during high-level trade talks this week with US representatives. Production at Chinese factories and mines expanded 5.2% last month from a year earlier, according to data released by the National Bureau of Statistics on Monday, the smallest gain since August 2024.

Retail sales grew 3.4% year-on-year in August, down from 3.7% in the previous month. Expansion in fixed-asset investment in the first eight months of the year decelerated sharply to 0.5%, the worst reading for the period on record except for the pandemic year of 2020.

“We are likely to see a notable slowdown in third-quarter GDP growth,” said to Bloomberg Serena Zhou, senior China economist at Mizuho Securities Asia Ltd. “The high base from the fourth quarter of 2024 suggests that we probably will see fourth-quarter growth slowing more significantly, jeopardizing the government’s 5% growth target if no major stimulus measures rolled out.”

With a boom in exports cooling off, many analysts and investors expected a downshift in China’s economy during the final months of 2025 after it clocked growth of 5.3% in the first half.