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Weak July data drives China to lean more on exports

July figures showed retail sales up just 0.6% year on year, while urban unemployment rose to 5.2%, reinforcing the case for exchange-rate management as growth relies increasingly on exports.

Reported · Written up by our desk · Central Banks

China’s economy lost momentum at the start of the second half of 2026, with July data pointing to softer consumption and industrial activity alongside a worsening property downturn, according to Action Forex.

The outlet cited July industrial production rising 4.5% year on year, while retail sales increased by only 0.6%. It also noted fixed-asset investment fell 6.7% year on year in the January to July period, after a 5.7% decline in the first half, alongside deterioration in the labor market, where the urban unemployment rate increased from 5.0% to 5.2%.

A key drag remains the property market, Action Forex said, with investment in the sector down as much as 19.2% and the pace of new-home price declines accelerating, pressuring confidence among developers and households. The report also linked weaker consumption to a sharp drop in passenger car sales, which fell 21% in July, and said the sector makes up about 8% of total retail sales of goods.

Action Forex added that unusually severe weather in July, including heavy rainfall, strong winds, and flooding, disrupted factory and port operations and caused power supply disruptions and evacuations. With the economy relying more heavily on exports, the outlet said that increases the importance of exchange-rate policy and government efforts to prevent an excessive appreciation of the yuan.

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