China's Retail Sales Stall as Investment Slump Deepens

The Wall Street Journal reported that activity cooled because surging exports fueled by the global AI boom failed to offset weakness in domestic demand.

Goldman Sachs blamed much of the consumer slowdown on a government trade-in subsidy program that pulled purchases forward and has since become a drag. "Real momentum was likely even weaker given higher CPI inflation," the bank's economists wrote in a note last Friday. Goldman expects sales growth to stay weak and full-year growth of about 1.5%.

The jobs picture may be worse than the official numbers show. A private survey by the team of Li Daokui, an economics professor at Tsinghua University, put China's broad unemployment rate at 10.2% as of July by counting people jobless for the past two years who have dropped out of the official labor force survey. More than half of the roughly 24 million long-term unemployed are aged 16 to 24.

Li called the pullback in investment "unprecedented," named contracting investment and high youth unemployment as the biggest obstacles to Beijing's growth targets, and urged the government to more than double this year's planned 12 trillion yuan ($1.7 trillion) in new debt issuance.