1 August data points to bleak outlook for China’s economy in 2025
On Sept. 15, the PRC National Bureau of Statistics released a range of economic data for August and the first eight months of the year. The NBS declared that “the national economy maintained overall stability and showed steady progress” in August under the “strong leadership of Party Central with Comrade Xi Jinping at the core.”
The data includes:
National fixed asset investment
- Total fixed asset investment (excluding rural households) increased 0.5 percent year-on-year during the January-August 2025 period to 32.6111 trillion yuan (calculated using a comparable caliber). This was the lowest growth rate for the period since September 2020.
- Private fixed asset investment fell 2.3 percent year-on-year.
- Total fixed asset investment (excluding rural households) decreased by 6.9 percent in August 2025 to 4.296 trillion yuan.
Retail sales
- Total retail sales of consumer goods increased 4.6 percent year-on-year to 32.3906 trillion yuan during the January-August 2025 period.
- Total retail sales of consumer goods excluding automobiles increased 5.1 percent year-on-year to 29.2643 trillion yuan.
- Total retail sales of consumer goods increased 3.4 percent year-on-year to 3.9668 trillion yuan in August 2025.
- Total retail sales of consumer goods excluding automobiles increased 3.7 percent to 3.5575 trillion yuan.
National real estate market
- Investment in real estate development decreased 12.9 percent year-on-year to 6.0309 trillion yuan during the January-August 2025 period (calculated using a comparable caliber).
- Investment in residential housing decreased 11.9 percent to 4.6382 trillion yuan.
- Sales area of new commercial housing decreased 4.7 percent year-on-year to 573.04 million square meters during the January-August 2025 period.
- Sales area of residential properties decreased 4.7 percent to 480.86 million square meters.
- Sales value of new commercial housing decreased 7.3 percent year-on-year to 5.5015 trillion yuan.
- Sales value of residential properties decreased 7.0 percent to 4.8447 trillion yuan.
Sales prices of commercial housing in 70 major Chinese cities in August 2025
New commercial housing
New home prices in 70 major cities fell 0.3 percent month-on-month in August 2025, sustaining a steady 0.3 percent drop for the third consecutive month and extending a 27-month streak of continuous declines.
Tier 1 cities
- Sales prices were down 0.1 percent month-on-month (0.1 percentage points lower than the previous month) and 0.9 percent year-on-year (0.2 percentage points lower than the previous month).
- Beijing: Down 0.4 percent MoM and down 3.5 percent YoY.
- Shanghai: Up 0.4 percent MoM and up 5.9 percent YoY.
- Guangzhou: Down 0.3 percent MoM and down 4.3 percent YoY.
- Shenzhen: Down 0.4 percent MoM and down 1.7 percent YoY.
Tier 2 cities
- Sales prices were down 0.3 percent month-on-month (0.1 percentage points lower from the previous month) and down 2.4 percent year-on-year (0.4 percentage points lower from the previous month).
Tier 3 and Tier 4 cities
- Sales prices were down 0.4 percent month-on-month (0.1 percentage points higher than the previous month) and down 3.7 percent year-on-year.
Second-hand housing
Second-hand home prices fell in 69 of the 70 cities surveyed, with Changchun recording a marginal 0.1 percent increase, the sole outlier. Notably, all four first-tier cities — Beijing, Shanghai, Guangzhou, and Shenzhen — saw declines in second-hand home prices, underscoring the absence of recovery even in China’s most resilient urban markets.
Tier 1 cities
- Sales prices were down 1.0 percent month-on-month (no change from the previous month) and down 3.5 percent year-on-year (0.1 percentage points higher than the previous month).
- Beijing: Down 1.2 percent MoM and down 3.1 percent YoY.
- Shanghai: Down 1.0 percent MoM and down 2.6 percent YoY.
- Guangzhou: Down 0.9 percent MoM and down 6.2 percent YoY.
- Shenzhen: Down 0.8 percent MoM and down 1.9 percent YoY.
Tier 2 cities
- Sales prices were down 0.6 percent month-on-month (0.1 percentage points higher than the previous month) and down 5.2 percent year-on-year (0.4 percentage points lower than the previous month).
Tier 3 and Tier 4 cities
- Sales prices were down 0.5 percent month-on-month (no change from the previous month) and down 6.0 percent year-on-year (0.4 percentage points lower than the previous month).
Our take
Despite Beijing’s assertions that China’s economy “maintained overall stability and showed steady progress,” its official data instead points to an accelerated economic decline that is unlikely to reverse in the near term. Key indicators reveal entrenched deflationary pressures, further weakening of the property sector, and faltering consumption. This suggests that the CCP’s 2025 growth target of 5 percent is increasingly out of reach in actual terms, although Beijing will almost certainly “massage” the data to hit its goal.
1. Fixed asset investment grew by a mere 0.5 percent year-on-year from January to August 2025, the weakest since September 2020 (excluding pandemic disruptions). Compared to the real estate-driven boom of August 2021, this represents a 6 percent decline, underscoring structural fragility. Real estate remains the economy’s primary drag, with investment plummeting 12.9 percent year-on-year and new residential sales dropping 7 percent in value. Relative to August 2021’s peak, real estate development investment has crashed by 38.8 percent and new home sales have halved, down 51.2 percent.
New home prices in 70 major cities have fallen year-on-year for 27 consecutive months, while second-hand home prices have declined for 42 months. First-tier cities — key barometers of confidence, policy, and market trends — show no signs of recovery. In August, only Shanghai recorded rising new home prices, driven by premium housing launches and relaxed purchase restrictions outside its outer ring . However, this relaxation has triggered sharp price drops in surrounding areas like Taicang and Kunshan, reducing spillover demand and threatening Shanghai’s long-term price stability. Meanwhile, second-hand home prices in all four first-tier cities fell, with widening declines. Beijing’s second-hand prices dropped 1.2 percent month-on-month in August, implying an annualized decline exceeding 15 percent, while Shanghai’s fell 1 percent, projecting a 12 percent annualized drop.
The People’s Bank of China reported that new medium- and long-term household loans (primarily mortgages) in August totaled just 20 billion yuan, signaling a collapse in home-buying intent. These loans reached 1.08 trillion yuan during the January-August period, down 230 billion yuan from 2024. By comparison, new medium- to long-term household loans reached 944.8 billion yuan in January 2021 alone, a figure almost equal to the total for January to August this year.
2. Total retail sales of consumer goods grew by a mere 3.4 percent in August, the slowest pace since November 2024 and below economists’ 3.9 percent forecast. PBoC data further highlights consumer retrenchment: household short-term loans (e.g., consumer credit) shifted from a net increase of 132.4 billion yuan in 2024 to a net decrease of 372.5 billion yuan in the first eight months of 2025, a 381.3 percent contraction.
Meanwhile, August’s short-term loan net increase of 10.5 billion yuan was 85.4 percent below August 2024’s 71.6 billion yuan. This shift reflects declining income expectations, with households opting for defensive savings over consumption, further stifling economic circulation.
3. China’s exports grew 4.4 percent in August and 5.9 percent year-to-date, but the August figure marks a six-month low, with imports also underperforming. Exports to the U.S. plummeted 33.12 percent, reflecting escalating trade frictions.
China’s slowdown in exports means that it cannot offset weaknesses in investment and consumption. Beijing is unlikely to hit its third quarter and annual growth targets without substantial data manipulation.
4. Beijing’s economic strategy remains fixated on industrial investments in green energy, digital economy, and artificial intelligence, with limited focus on domestic demand stimulus (e.g. 300 billion yuan for trade-in programs, 66.74 billion yuan for employment subsidies, and 500 billion to 1 trillion yuan for fertility incentives). These measures fail to address chronic overcapacity, as the “involution” cycle persists, nor do they effectively boost consumption amid declining income expectations.
Escalating U.S.-China trade tensions, with Beijing’s confrontational stance showing no signs of easing, exacerbate uncertainties. Local government policies, such as offshore fishing regulations and mandatory pension contributions, further strain businesses, reducing employment and incomes. Meanwhile, Beijing’s push to weaponize its economy through outward expansion aims to offload excess capacity, but risks entrenching deflationary pressures domestically.
What’s next
Barring transformative reforms, China’s economy is unlikely to turn around in the short term. Investors should brace for heightened volatility and structural challenges in the near term.
2 CCP makes strong propaganda push for ‘global governance system’
Sept. 12 to Sept. 17
State mouthpiece Xinhua published a series of six commentaries on the theme of “building a more just and reasonable global governance system.” The titles of these commentaries were:
1. “China’s Proposal to Address the Deficit in Global Governance”
2. “Upholding Sovereign Equality as the Primary Premise”
3. “Upholding International Rule of Law as the Fundamental Safeguard”
4. “Upholding Multilateralism as the Basic Path”
5. “Upholding People-Centeredness as the Value Orientation”
6. “Upholding Action-orientation is an Important Principle”
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The commentary series starts with presenting the overall plan (first article) and foundational principles (second, third, and sixth articles) of the PRC’s plan to “build a more just and reasonable global governance system.” The series then moves on to the plan’s implementation and value goals.
On the surface, the central idea expressed in the commentaries is that the PRC advocates reforming the current unjust (U.S.-dominated) global governance system through “equality, rule of law, multilateral cooperation,” and a people-centered governance model. The goal is to promote world multipolarity and economic globalization in the direction of so-called “greater fairness and inclusiveness,” thereby realizing the vision of a “community with a shared future for mankind” (based on the PRC’s “socialism with Chinese characteristics”).
Our take
The recent Xinhua series on “building a more just and reasonable global governance system” appears to be a continuation of the CCP’s post-Beijing parade messaging. Through Party doublespeak and the rehashing of the PRC’s foreign policy tropes (“multilateralism,” “community with a shared future for mankind,” etc.), the Xinhua commentaries offer further narrative justification for Communist China’s role as a leading world power and it eventually replacing the United States as global hegemon.
At the level of personal politics, the Xi leadership likely intends to leverage the momentum of its “successful” commemoration of the 80th anniversary of China’s “war of resistance” against Imperial Japan to craft propaganda that externalizes China’s domestic economic difficulties, pacifies internal Party discontent, and emphasizes Xi Jinping’s paramount importance to the regime.
1. Xi Jinping’s conceptualization of “global governance” can be traced back to the launch of the Belt and Road Initiative in 2013 during his first term. The Xi leadership would incrementally expand on the concept, including promoting the CCP’s version of “multipolarism” before the 20th Party Congress and the four “global” initiatives post-COVID-19 (Global Development Initiative, Global Security Initiative, Global Civilization Initiative, and Global Governance Initiative).
Xi’s hosting of world leaders at the Sept. 3 parade in Beijing was likely meant to showcase the idea of Communist China at the head of an alternative global order to the U.S.-led one. However, the optics of the event (i.e. no Western leaders in attendance, Xi walking alongside Russia’s Vladimir Putin and North Korea’s Kim Jong Un en route to the viewing deck, etc.) cast Xi and the CCP as the de facto leader of an “axis of autocracies.”
2. The recent Xinhua propaganda series emphasizes the “continuity” from China’s victory against Imperial Japan to the “great rejuvenation of the Chinese nation,” extending this narrative into the “Chinese solution” for global governance. It also claims Xi Jinping’s global governance vision represents the “wisdom to solve the global governance deficit.” This narrative appears designed to deflect attention from pressing domestic crises — such as the real estate collapse, surging unemployment, and the impact of U.S.-China trade frictions on exports — by externalizing blame onto Western “hegemonic” containment.
Xinhua’s recent series of commentaries sketches out a grand vision — a blueprint of a “China-led multipolar world,” hinting at a future where China and the U.S. “stand as equals” in ruling the world. The real purpose is to persuade CCP elites to endure the current “difficult times” under U.S. sanctions, and to frame Xi’s policy failures in the “bigger picture.” Rather than confronting the “fallacy of composition” in its own policies — where isolated and often misguided measures by local governments cumulatively exacerbate economic and other malaise — the CCP reframes these as triumphs of “calm leadership” under Xi’s core guidance, turning adversity into a propagandistic “success story.”
3. The recent Xinhua commentaries also seek to upgrade Xi Jinping’s mandate ahead of the 21st Party Congress in 2027. The previous two Party Congresses saw Xi promote his domestic vision for China (“Chinese Dream”) and affirm his paramount position in the regime (“Two Establishes”). Now the “unstoppable rejuvenation” trope is globalized, portraying “Chinese solutions” as universal “public goods” capable of resolving the global governance deficit, with Xi cast as a visionary leader championing the interests of developing nations.
This rhetorical expansion seeks to transform Xi’s domestic legitimacy into a transnational one, framing his continued rule as essential not just for China’s revival but for a balanced world order. By embedding these ideas in historical commemorations, the CCP lays the theoretical groundwork for Xi’s fourth term, positioning him as indispensable in navigating “changes unseen in a century” on the global stage.
4. At the heart of Xinhua’s commentaries lies a subtle critique of U.S. hegemony. The commentaries advocate an “equal multipolar world” infused with “Eastern wisdom,” and promotes a “community with a shared future for mankind” to reform global governance, ostensibly shifting from “deficits” to “balance.” In practice, it entails exporting CCP-style ideology, technological authoritarianism, and economic models to the Global South, countering U.S. influence while fostering dependencies through initiatives like the BRI.
Xinhua’s messaging resonates with domestic nationalists and chauvinists, evoking illusions of Communist China as the “big brother” to developing nations. By stoking these sentiments, the CCP is likely looking to galvanize support for Xi’s “great power” diplomacy, with the goal of reinforcing regime stability by diverting public focus away from mounting internal problems and channeling energies toward perceived external triumphs.
Additionally, the Xinhua commentaries’ sketch of an ambitious blueprint for a “China-led multipolar world” can serve to mollify CCP elites who have been or could be targeted by U.S. sanctions. By encouraging them to view Xi’s policy missteps through a “big picture” lens of long-term geopolitical ascendancy, the Xi camp is attempting to sustain internal political cohesion amid economic headwinds.
