The main variables of China’s economy slowed down in Augustlocated below what is projected by the market. It is a situation that could lead to a new package of measures to boost consumptionas happened last year. In parallel, And while trade negotiations with the United States continuethe risk of deflation in Asian power grows, consequence of the diversion of a part of its exports to the domestic market.
Retail sales grew 3.4% year -on -year Last month, the lowest level since November 2024, as reported by the National Statistics Office from China. Anyway, economists from Economics Capital Zichun Huang and Julian Evans-Pritchard explained in a recent report that this slowdown was due to the effect of inflation: “In real terms, growth remained practically unchanged“
However, they stated that “The retail sector slowed in recent months when the impulse dissipated “ of the stimulus programs of consumer goods launched last year. In addition, they also stated that the activity in the services sector in general “is slowing down.”
On the other hand, Industrial production increased 5.2%its lowest level in 12 months. “The lower external demand is partly responsiblesince industrial sales for export are slowing down, “they argued.
In dialogue with Scopethe researcher of the CONICET and from the National University of General Sarmiento, Mariano Treacyhe explained that “in recent years China It has been modifying its development model and is trying to dump the surplus of production to the domestic market“Therefore,” for that you need to increase domestic sales and for that you need to grow the consumption capacity of people and salaries.
And he deepened: “China has been mutating from a model oriented to exports, to an internal market -oriented growth model. Therefore, therefore, The key fact is not so much of the industrial product, but that of retail sales of consumer goods“Anyway, he clarified that” although it is true that it is growing at a lower rate than the average of the last almost 35 years, is growing at a rate that is according to what is projected”
The investment lost impulse: the real estate sector in the sights
Investment in fixed assets also grew at a slower pace than expected: +0.5% in the first eight months of 2025, which marked its worst performance outside the pandemic. From Economics Capital They explained that this decrease in The investment “widely affected the manufacturing, infrastructure and real estate sectors” And they emphasized that the last item “remains the one that behaves worse.”
And they deepened: “Heat waves and floods of summer are partly responsible, so it is likely that some recovery will occur in the coming months. However, There are also more fundamental obstacles, such as decreased fiscal support and efforts to reduce excess capacity“
Similarly, China’s chief economist from the Bank ING, Lynn Songhe argued that “the fall of the real estate market It is a key factor in the weak consumer confidencewhich continues to ballast retail sales. “
A new stimulus for consumption?
Consulted by Scopethe economist and director of the Center for Studies in Research Sino-Latin American, Gustavo turnedhe explained that “China’s economy is having A performance quite similar to last yearwhere in the first part of the year the figures exceed what is pre -established in the five -year plan. “
For his part, Song explained that “a similar situation occurred at the same time last year, when a deceleration in July and August data further deteriorated confidence”, a situation that “It happened before the Popular Bank of China presented a flexibility package (fiscal) in September”.
And he added that “a more marked change towards stimulus in general contributed to generate a strong rebound in the fourth quarter of 2024which allowed Chinese growth to close the year by 5%. “
The risk of deflation
Turned He commented to this media that “Trump’s policy to inhibit the North American market for many Chinese products resulted in an over-offered of many Chinese products about the rest of the world”, to which it was added that “Many products also turned to the Chinese domestic market itself, throwing prices down”. Therefore, he stressed that “A potential problem in China is that there will be deflation”.
Last week, August wholesale inflation was known. The measurement showed null growth in prices, while In July the increase was 0.4%. At the year -on -year level, however, there was a deflation of the 2.9%while in July there was a decrease in -3.6% against the same month last year.
In addition, Treacy said that the risk of deflation is linked to the “latent risk” of excess supply. “If China is no longer in an overproduction crisis, it is very likely that it enters one of here to 5 or 10 yearsthat’s why the Chinese Communist Party is also modifying its development model and is widening the domestic market to absorb all that surplus. “
Anyway, he considered that “it is very difficult for that overproduction crisis to raffle” and considered the possibility that “it can get into deflation as happened to Japan in the 90s, which makes the economy slowly slow down.”
The impact in Argentina
Although China is the most important partner of Argentina, together with Brazil, Turned ruled out the possibility that this economic slowdown can hit local exports. “Food consumption is not falling in China: Argentina sells vegetable protein so that they feed their pigs and chickens. So that does not change much,” he argued.
Besides, He stressed that “several years ago sales to the People’s Republic of China” are not increasedand deepened: “We have already stopped being competitive in products that perhaps had a degree of added value on primary products and that obeys politics in Argentina regarding the exchange rate.”
Complementary, Treacy dismissed that “The situation of the slowdown in industrial production affects Argentine exports in the short term”. And he added that “China will continue to demand food and minerals.”
Source: Ambito
