China’s economy showed signs of slowing in July, with two of its key indicators — industrial production and retail sales — expanding at their weakest pace so far this year.

Figures released Friday by the National Bureau of Statistics (NBS) showed industrial output rising 5.7% year-on-year, down from June’s 6.8% and the slowest rate since November 2024. Retail sales growth also eased, climbing 3.7% compared to 4.8% the previous month.

The weaker data comes against the backdrop of a prolonged property market slump, trade tensions with the United States, and concerns about deflation. New home prices in 70 major cities fell by 0.3% in July, continuing a series of monthly declines that have dented hopes for a swift housing sector recovery.

Policymakers have recently highlighted the problem of “involution” — a term used to describe excessive competition within industry — which they say is contributing to overproduction and pushing down prices. Consumer prices were flat year-on-year in July, while producer prices fell 3.6%, according to official data published last week.

To support domestic consumption, authorities have introduced measures including subsidies for new parents and trade-in schemes for household appliances. The NBS also noted that extreme weather in July, including high temperatures and flooding, had disrupted activity.

The housing sector remains a major drag on growth. Property investment fell 12% in the first seven months of 2025 compared with the same period last year, despite government moves to restore confidence. Measures include mortgage rate cuts, converting unused apartments into social housing, and easing purchase restrictions in some cities.

Investment in fixed assets between January and July rose 1.6% year-on-year, down from 2.8% in the January-June period and missing market expectations. However, some manufacturing segments — including automobiles, railways, shipbuilding, and aerospace — have continued to expand, reflecting Beijing’s push into high-tech and strategic industries it labels “new quality productive forces.”

Trade remains a crucial support for China’s economy. Exports grew 7.2% in July compared to a year earlier, helping to offset some domestic weakness. The performance comes as the US and China recently agreed to a 90-day pause in their ongoing trade dispute, though analysts warn that higher tariffs and duties on rerouted shipments could weigh on exports later in the year.

Monetary data released Thursday by the People’s Bank of China showed an unexpected fall in overall new loans in July, further signalling a slowdown in credit demand.

China has set a GDP growth target of around 5% for 2025, matching last year’s goal. In the second quarter, GDP grew 5.2% year-on-year, according to official figures.

Despite sector-specific strength in policy-favoured industries, the July data suggests that momentum is faltering in the world’s second-largest economy as it contends with property market weakness, soft consumer sentiment, and global trade headwinds.