China slowing down: industrial production slows to 4.5% in July

The most politically inconvenient economic data hit the Chinese nomenklatura retreating informally in the seaside resort of Beidahe. Industrial production, sales, fixed investments, house prices, unemployment: the issues to be resolved ahead of the October Plenum tangle in front of the disappointing July indicators.

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Chinese production grew only 4.5% year-on-year, slowing down from 5.3% in June – the fastest growth in the last three months – and below the 5.0% expectations, due to weak domestic demand and extreme weather disruptions. The slowdown occurred in a context of weaker growth in the manufacturing sector (5.5% versus 6.0% in June) where 25 of the 41 main industries recorded growth, including computers and communication equipment (19.1%), railways and shipbuilding (13.6%), general equipment (9.5%), special equipment (12.6%), electrical machinery (5.3%). Conversely, production decreased in chemicals (-1.2%), coal (-10.8%), and non-metallic mineral products (-3.3%).

Retail sales increased by 0.6% year-on-year in July 2026, slowing down from 1% growth in June and falling well below expectations of a 1.5% year-on-year increase. Car sales fell by 17.0%, while retail sales increased by 2.5%. Petroleum products (-7.6%), furniture (-8.8%), and building materials (-14.2%) declined. Conversely, sales of communication equipment increased by 20.4%. By segment, catering revenues increased by 1.4%, while retail sales of goods increased by 0.5%. Online sales of goods increased by 4.6% in the first seven months.

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Worse still, China’s fixed asset investments fell by 6.7% year-on-year in the January-July 2026 period, with the market expecting a figure between the 6.2% decline and the 5.7% decline recorded in the first half of the year. Real estate investments remain the real obstacle, with a 19.2% drop after an 18% decline in the January-June period, while infrastructure investments (-3.6% versus -2.4%) and manufacturing sector investments (-1.7% versus -1.2%) also decreased. Excluding the real estate sector, fixed asset investments fell by 5.7% in January-July, with a further decline compared to the 2.7% recorded in the first six months of the year. On a monthly basis, fixed asset investments decreased by 1.42% in July, accelerating compared to the 0.37% decline in the previous period.

New house prices in 70 cities fell by 3.2% year-on-year in July 2026, after a 3.3% decline the previous month. For the 37th month, the negative trend prevails. Among the main cities, prices continued to fall in Beijing (-2.3% versus -2.1% in June), Guangzhou (-2.2% versus -2.6%), Shenzhen (-2.9% versus -3.6%), Chongqing (-3.7% versus -4.2%), and Tianjin (-4.4% versus -4.6%). Shanghai remained the absolute leader, with new house prices increasing by 3.0%, only slightly slower than the 3.1% increase in June. On a monthly basis, new house prices fell by 0.1%, in line with the decline in June.

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