The slowdown was driven by a combination of factors, including weak consumer spending, sluggish industrial production, and a decline in investment. These factors combined to create a challenging environment for businesses and consumers alike. The slowdown in August was particularly pronounced in the services sector, which accounts for a significant portion of China’s GDP.

The Chinese economy is facing a challenging period, with a slowdown in growth and rising unemployment. The government is struggling to find a way to boost demand and stabilize the economy. The central bank has been cutting interest rates to stimulate borrowing, but the impact has been limited.

Even before Saturday’s release, a vast majority of global banks including JPMorgan Chase & Co. already expected China’s GDP to grow at the lower end of Beijing’s goal target. Economists have called for authorities to do more to avert falling into stagnation akin to Japan’s “lost decades.” The downbeat data may just drive home their point, showing even the more resilient part of the Chinese economy is losing traction. Industrial output expanded at a slower rate than economists had expected, extending a weakening streak to the fourth month, the longest stretch since September 2021. That suggests the main driver of the Chinese economy this year — bolstered by exports and government support — is losing steam. More challenges may yet arise as trade tensions intensify over complaints about Chinese overcapacity by the US and other major partners.

This statement reflects a cautious outlook on the global economy, particularly in the context of the ongoing trade war between the US and China. The statement also highlights the importance of external demand for economic resilience. The statement also emphasizes the need for a “cautious” approach to economic policymaking. This is because the global economy is facing multiple challenges, including trade tensions, slowing global growth, and rising inflation.

The National Bureau of Statistics (NBS) released its latest unemployment figures for August, revealing a slight uptick in the urban unemployment rate. The NBS spokesperson, Liu Aihua, attributed this rise to several factors, including the challenging external environment and insufficient domestic demand. Liu Aihua highlighted the impact of the global economic slowdown, particularly on China’s export sector.

This projection is based on the latest data and analysis of economic indicators, including industrial production, retail sales, and fixed-asset investment. These indicators have shown signs of resilience and continued growth, indicating a strong recovery in the Chinese economy. Rong’s projection is in line with the government’s target of 5.5% GDP growth for the year.

Retail sales increased 2.1%, slowing from July’s 2.7% and missing projection of 2.5% Fixed-asset investment gained 3.4% on year in the January-August period, down from the 3.6% growth in the first seven months. Economists had forecast a 3.5% expansion Property investment fell 10.2% in the period, unchanged from July and slightly worse than prediction of a 10% drop The surveyed unemployment rate in urban areas climbed to 5.3%, up from 5.2% in July and the highest since February Economists widely expect PBOC to ease monetary policy in the coming weeks, including by reducing the amount of cash lenders must keep in reserve. The central bank could also lower the interest rate on policy loans to reduce banks’ funding cost.

“With confidence low and deflation risk significant, the kind of monetary policy action the PBOC would contemplate is unlikely to make a substantial difference,” said Louis Kuijs, chief Asia-Pacific economist at S&P Global Ratings. “Fiscal policy stimulus would be more appropriate and effective.”