FX.co ★ China Warns of Risks as July Data Underscores Economic Weakness

China's economy continues to grapple with various vulnerabilities, according to the statistics agency, which linked the lackluster performance in July 2025 to persistent challenges posed by a complex and unpredictable global environment, compounded by extreme weather conditions. In response, authorities have intensified scrutiny over excessive production in sectors such as steel and coal, aiming to curb the intense competition that has eroded profits and exacerbated deflation. Data released on Friday revealed that industrial output increased by 5.7% year-on-year, falling short of the anticipated 5.9% and marking the slowest growth in eight months. Retail sales rose by 3.7%, the weakest in six months and below the 4.6% expected. The surveyed unemployment rate rose to a four-month high of 5.2%, while the downturn in the property market persisted, with both prices and investment continuing to decline. Additionally, although a temporary U.S.-China trade truce has been extended by 90 days, averting tariff increases, manufacturers are still feeling the pressure from weak demand and deflation at the factory gate.