The figures underline the difficulty policymakers face in reviving household demand, particularly as the prolonged property downturn continues to weigh on household wealth and confidence.

Urban fixed-asset investment fell 6.7% in the first seven months from a year earlier, worsening from a 5.7% contraction in the first half and marking the weakest reading since April 2020.

The decline was broader than property, with real estate investment down 19.2%, infrastructure investment falling 3.6% and manufacturing investment declining 1.7%. Private-sector investment was particularly weak, contracting 9.4%.

Industrial production provided some resilience but also slowed, rising 4.5% in July compared with 5.3% in June. High-tech manufacturing continued to thrive, with a 16.9% expansion, while the production of industrial robots, new-energy vehicles, and semiconductors maintained strong growth.

Computer, communication, and electronic equipment output rose 19.1%, highlighting the growing importance of technology and advanced manufacturing to China’s industrial economy.

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The contrast between resilient high-tech production and weak domestic demand is becoming increasingly pronounced. China’s factories have benefited from strong overseas orders linked to the global artificial-intelligence infrastructure boom, helping exports cushion weakness at home. However, this export-driven support exposes the economy to trade tensions, tariffs, and fluctuations in global demand.

The property market remains a major drag. New home prices fell 0.1% month-on-month in July and 3.2% from a year earlier. Only 17 of the 70 Chinese cities covered by the official survey recorded monthly price gains, suggesting that stabilisation remains concentrated in major urban markets rather than being a nationwide recovery. Falling property values and weak sales continue to suppress construction, investment, and household confidence.

The fading impact of government trade-in subsidies, which previously accelerated some purchases, is also restraining consumer demand.

Auto sales fell 17% year on year in July, while furniture sales declined 8.8%, building and decoration materials dropped 14.2%, and gold and jewelry sales fell 10.1%. The weakness in big-ticket and property-linked spending points to persistent caution among households.

Employment adds to the concern. The official urban unemployment rate rose to 5.2% in July from 5% in June, while youth unemployment remained elevated.

A broader private survey has suggested substantially higher unemployment when people who have left the official labor force sample are included, underlining the uncertainty surrounding the labour market.

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Weak lending is another warning sign. New bank loans recorded their largest monthly decline on record in July, while household borrowing, including mortgages, contracted after a brief recovery.

Banks have become more cautious about borrowers’ repayment capacity as the housing slump and softer labour market reduce demand for credit.

That combination risks reinforcing the cycle of weak spending, subdued investment, and cautious corporate behavior, making a faster policy response increasingly important for Beijing in the coming months and quarters.

Extreme weather also disrupted activity. Three typhoons made landfall in July, with heavy rain and strong winds disrupting factories, ports, and transport networks across parts of the country. Officials said weather effects contributed to the slowdown, but economists argue the weakness predates those disruptions.

The pressure is now shifting to policymakers. China’s leadership has pledged faster fiscal spending and timely measures to support growth, while officials have called for stronger counter-cyclical adjustments and measures to boost domestic demand.

Premier Li Qiang also urged efforts to stabilise external demand, promote employment and incomes, and encourage private investment in infrastructure.

However, major new stimulus for households or the property sector has yet to emerge. Economists expect fiscal acceleration to support public-sector activity but question whether it will be enough to reverse the broader investment decline.

With second-quarter GDP growth slowing to 4.3%, below Beijing’s 4.5%-5% full-year target range, the July figures raise the risk that expansion will remain dependent on a narrow group of export and technology industries.

The challenge for policymakers is to turn those pockets of strength into a broader recovery in consumption, private investment, and jobs.