Chinese economic trends continue to follow two paths

China National Bureau of Statistics (NBS) reports retail sales grew nominally a mere 0.4 % y-o-y in August. Real growth, which takes inflation into account, likely contracted. Retail sales growth, a rough indicator of domestic consumer activity, has remained very sluggish since late last year. NBS reports growth in services sales outpaced growth in retail goods sales (nominal growth of 4.9 % y-o-y for January-August). Combined nominal goods and services retail sales increased in the first eight months of this year by 2.5 % y-o-y.

Industrial output on the other hand remained robust, climbing 5.2 % y-o-y in August. Manufacturing of high-tech goods (up 17 %) and electronic equipment (up 17 %) experiences particularly impressive growth. Growth was distinctly lower in industries with lower value added. Industries experiencing output declines included mining & quarrying, oil, mineral processing and wood processing.

Chinese export industries have been lifted by the global increase in demand for high-tech equipment and components associated with capital expenditure on artificial intelligence (AI) and cloud computing infrastructure. The total value of China’s goods exports in August increased by 25 % y-o-y (up 19 % in January-August). For example, the value of exports of electronic equipment and related parts soared by 43 % y-o-y in the first eight months of this year. The value of imports also rose rapidly in August (up 29 % y-o-y and 24 % for January-August). China imported somewhat more crude oil in August than in July, but oil imports were still down 23 % from August 2025 (the value of oil imports in August declined by 9 % y-o-y). Much of the growth in the value of foreign trade has reflected higher prices for energy and high-tech products. China Customs reports that the volume of exports increased by roughly 11 % in the first seven months of this year, while the volume of imports was up by about 7 %. Customs data also shows that the export volume of electronic equipment and related parts increased by roughly 20 % y-o-y.

Domestic consumer price inflation in August remained subdued at 0.8 % p.a. Driven by spiking energy prices, producer price inflation in August accelerated slightly from July to 3.8 %.