China's economy slows sharply as trade war bites
thehindubusinessline.com -- Friday, August 15, 2025, 5:45:57 AM Eastern Daylight Time
Categories: U.S.–China Relations, Trade Policy & Tariffs, Economic Policy & Jobs
China's economy slowed across the board in July with factory activity and retail sales disappointing, suggesting Donald Trump's trade war is starting to weigh on the world's No. 2 economy.
Production at Chinese factories and mines rose at the slowest rate since November and expanded 5.7 per cent last month from a year earlier, according to data released by the National Bureau of Statistics on Friday, compared with June's gain of 6.8 per cent. The median forecast of economists in a Bloomberg survey was for an increase of 6 per cent.
Retail sales grew 3.7 per cent on year in July, the least this year, down from 4.8 per cent in the previous month. Expansion in fixed-asset investment in the first seven months of the year decelerated to 1.6 per cent, as a contraction in the real estate sector deepened. The surveyed urban unemployment rate worsened more than expected to 5.2 per cent.
"July's main economic indicators suggest that the country's tariff-related swoon has begun," said Homin Lee, a senior macro strategist at Lombard Odier in Singapore. "The loss of momentum evident in both demand and supply indicators calls for the mid-year fiscal policy tweak."
The offshore yuan held steady after the data release and the yield on China's 10-year government bonds edged slightly lower. Chinese equities largely held on to their earlier losses, with the Hang Seng China Enterprises Index down 1 per cent and the onshore CSI 300 Index trading slightly lower.
The latest snapshot of the economy indicated China's growth lost steam after a show of resilience earlier in the year allowed Beijing to take a wait-and-see approach to further stimulus.
Top leaders have signaled they will stick with supportive measures already planned while promising to pump more aid when needed, a strategy analysts expect to be fine-tuned pending economic figures in the coming months.
"China's economy overcame negative factors including a complex and fast-changing external environment and extreme weather at home, and maintained progress amid stability," the NBS said in a statement. "The economy showed relatively strong resilience and vibrancy."
Although uncertainty abounds over the outlook for global trade, industrial activity and construction also suffered from extreme weather. The disruptions in July, caused by high temperatures, unusually heavy rain and flooding in large swathes of China, added to what's traditionally a slow season for the economy.
Growth in yuan-denominated new loans contracted for the first time in 20 years in the month, highlighting subdued willingness for borrowing and spending.
But in a boost to the economy, China's exports remained a bright spot this year despite a drop in shipments to the US after Trump raised tariffs.
Instead of announcing massive new measures to juice growth, Beijing in recent weeks ramped up efforts to curb cutthroat competition among businesses. The campaign has attracted intense attention from investors given the stakes involved in reflating the economy and the potential impact on corporate profitability in industries from steel to solar energy and electric cars.
Authorities are also looking for ways to boost domestic consumption to reduce reliance on foreign demand in the long run amid rising rivalry with the US.
The government this week unveiled a plan to subsidise part of the interest payments on some consumer loans, after announcing earlier it will gradually waive preschool fees to ease education costs and offer childcare subsidies for families across the nation.
"Looking ahead, economic activity data will likely show more signs of growth slowdown, perhaps even at a faster pace in the coming months," said Xiaojia Zhi, chief China economist at Credit Agricole CIB in Hong Kong.
Sign Our PetitionThe recent slowdown in China's economy presents an opportunity for deeper analysis of the intersections between global economic policies and domestic social realities. The economic indicators released for July 2023, which marked a notable decline in factory output and retail sales, reveal the tangible impacts of the trade war initiated under the Trump administration. This situation is not merely an isolated economic event; it underscores the broader implications of trade policies and their capacity to disrupt not only national economies but also the lives of working-class individuals who bear the brunt of such external pressures.
Historically, trade wars have often led to increased tensions, not just between nations but also within them. The U.S.-China trade war, which escalated under Trump’s presidency, was framed as a necessary measure to protect American jobs and industries. However, the reality is far more complex. As tariffs were imposed on Chinese goods, the repercussions began to reverberate through supply chains and consumer prices, ultimately affecting both Chinese manufacturers and American consumers. The current slowdown in China's economy is a stark reminder that trade policies have real consequences for workers on both sides of the Pacific. By fostering a narrative that prioritizes nationalism over global cooperation, the trade war has exacerbated economic insecurities and contributed to a climate of uncertainty that has left many families struggling.
Moreover, the data released by the National Bureau of Statistics indicates a worrying trend in urban unemployment, which has risen to 5.2%. This figure is not just a number; it represents countless individuals facing job insecurity, diminished wages, and the threat of poverty. This economic precariousness is further compounded by the ongoing contractions in sectors such as real estate and manufacturing, which have historically provided stable employment for millions. It is crucial to connect these economic realities to the social struggles currently unfolding within China. As economic conditions deteriorate, the potential for social unrest increases, as seen in various movements across the globe where economic disenfranchisement has led to calls for change.
The response from the Chinese government, as articulated in the statement by the NBS, reflects a dual approach of seeking stability while maintaining momentum. The acknowledgment of “negative factors” such as a complex external environment and extreme weather hints at the understanding that economic resilience is not solely a matter of fiscal stimulus but also requires addressing systemic vulnerabilities. The ongoing campaign to curb “cutthroat competition” among businesses could be interpreted as a recognition of the need for sustainable practices over profit maximization, which often leads to exploitation of workers and resources. This shift towards a more equitable approach could serve as a lesson for other nations grappling with similar issues of inequality and economic instability.
The resilience of China's exports, despite the drop in shipments to the U.S., indicates a potential pivot in global trade dynamics. It is essential to consider what this means for the future of international commerce and the relationships between countries. The economic narrative surrounding China often paints it as an adversary, but a more nuanced understanding reveals the interconnectedness of global economies. As countries reassess their trade relationships in light of recent developments, there is an opportunity to advocate for fair trade practices that prioritize workers’ rights and environmental sustainability over corporate profits.
In conclusion, the state of China's economy amidst the backdrop of the U.S.-China trade war offers a rich ground for discussion about the consequences of economic policies on social justice. The interconnectedness of global markets necessitates a shift away from protectionist measures and towards collaborative strategies that uplift workers and foster equitable growth. The lessons from China’s current economic challenges resonate across borders, calling for a re-evaluation of how nations engage in trade and the implications of those interactions on ordinary citizens. As we navigate these complex issues, it is imperative to advocate for policies that promote fairness, sustainability, and the wellbeing of all individuals, rather than merely maximizing profit margins for a select few.
The recent downturn in China's economic performance starkly illustrates the ripple effects of the trade war initiated by former President Donald Trump. As reported, key indicators such as factory output and retail sales have shown significant declines, suggesting that the policies aimed at reshaping trade relationships have come at a considerable cost—not just to China, but to the U.S. economy and the global market at large. Understanding this situation requires us to delve into the historical context of trade relations and the politics surrounding economic policy, as well as how such issues can be reframed in discussions with those who may hold opposing viewpoints.
Historically, trade wars are often a double-edged sword, affecting both the aggressor and the target nation. Trump's tariffs on Chinese imports were framed as a necessary response to unfair trade practices, but the consequences have been widespread. While the intention was to bolster American manufacturing, the reality has been rising prices for consumers and increased instability in the global economy. This context can be articulated to right-leaning individuals who may champion these policies: how can we support American workers while simultaneously undermining the very economy that supplies them? This is a crucial question that highlights the often overlooked complexities of international trade and its effects on domestic livelihoods.
Moreover, the recent data indicates that China's economic resilience is waning, with a noticeable increase in unemployment and a slowdown in retail sales. However, the narrative in conservative circles often overlooks the interconnectedness of economies in today’s globalized world. With China’s exports still demonstrating significant resilience, despite the tariff impacts, this suggests that the global market dynamics are shifting. Engaging in conversations about how interdependence can foster economic stability rather than hostility can help bridge the ideological divide. After all, a stable economy in China ultimately contributes to the stability of the U.S. economy—something that should resonate with all Americans, regardless of political affiliation.
As concerned citizens, we must advocate for policies that prioritize diplomatic engagement and collaborative trade agreements rather than hostility and isolationism. This means urging representatives to seek alternatives to tariffs, such as renegotiating trade terms that address concerns over intellectual property and labor rights without resorting to punitive measures. It’s essential to educate others on the potential for mutually beneficial agreements that elevate environmental standards and labor protections, which could mitigate some of the inequalities that critics of globalization often cite. This approach not only addresses economic concerns but also aligns with broader social and environmental justice goals.
While the economic forecast for China appears bleak, we must also recognize the environmental factors at play, such as extreme weather causing disruptions. This provides an opportunity to discuss climate change and its implications for economic policy. The increasing frequency of natural disasters, exacerbated by climate change, impacts production capabilities and supply chains worldwide. Advocating for climate-forward policies not only addresses immediate economic concerns but also aligns with a vision of sustainable growth. Conversations with right-leaning individuals can be steered toward acknowledging the realities of climate change and the necessity for cooperative global solutions, which can protect jobs in the long term.
In conclusion, the current economic challenges faced by China, as exacerbated by the trade war, open a vital dialogue on the importance of strategic economic policy, environmental sustainability, and international cooperation. By framing these discussions in terms of shared economic interests and the need for sustainable growth, we can cultivate a more constructive conversation that resonates with a broad audience. Let us advocate for informed policies that foster resilience and collaboration rather than division, ensuring a more equitable and prosperous future for all.
To address the issues raised in the article regarding the slowdown of China's economy amidst the trade war, there are several actionable steps individuals can take to engage with the situation in a meaningful way. Here’s a detailed list of ideas, actions, and practical examples:
### Personal Actions:
1. **Stay Informed and Educate Others**: - Follow reputable news outlets, economic reports, and analysis on global trade, economic policies, and their implications. Share this information with your community to raise awareness about the impacts of trade wars. - Host discussions or forums in your community or online to foster understanding of economic issues, focusing on how they affect local businesses and relationships with international partners.
2. **Support Fair Trade Practices**: - Buy from local businesses that prioritize fair trade and ethical sourcing. This can support local economies and reduce the reliance on international trade affected by tariffs. - Engage with organizations that promote fair trade, such as Fair Trade Certified or the Fair Trade Federation, and encourage local stores to carry fair trade products.
3. **Advocate for Policy Change**: - Write to your local representatives to express your concerns about the implications of trade wars on global economies and local job markets. - Suggest that they advocate for policies promoting fair trade agreements rather than punitive tariffs.
### Specific Actions:
1. **Petition for Fair Trade Policies**: - Sign or create petitions that urge government officials to prioritize fair trade policies over tariffs. Websites like Change.org allow you to start petitions and gather support. - Example Petition: "Support Fair Trade Policies Over Tariffs" — Create a petition on a platform like Change.org and share it through social media to gather signatures.
2. **Contact Elected Officials**: - Write to your congressional representatives expressing your views. Here’s how to contact them: - **Senator Jon Tester (D-MT)**: - Email: tester.senate.gov/?p=email_senator - Mailing Address: 311 Hart Senate Office Building, Washington, D.C. 20510 - **Representative Alexandria Ocasio-Cortez (D-NY)**: - Email: ocasiocortez.house.gov/contact - Mailing Address: 1623 Longworth House Office Building, Washington, D.C. 20515 - When writing, express your concerns about the impact of trade wars on international relations and advocate for cooperative trade agreements.
3. **Engage with Activist Groups**: - Join groups that focus on economic justice and trade issues, such as Public Citizen or the Economic Policy Institute. Attend their meetings, participate in campaigns, and engage with their resources. - Example: Attend local events hosted by these organizations to learn more about trade policies and share insights with your network.
4. **Social Media Advocacy**: - Use platforms like Twitter and Facebook to advocate for fair trade practices. Share articles and insights, tagging relevant lawmakers and organizations. - Start a hashtag campaign focused on the importance of fair trade, such as #FairTradeForAll, to increase visibility and encourage dialogue.
5. **Support Local Economic Initiatives**: - Participate in local initiatives that promote economic resilience, such as community-supported agriculture (CSA) programs or local business fairs. - Advocate for local governments to invest in infrastructure that supports small businesses and reduces reliance on international supply chains affected by tariffs.
### What to Say:
- When contacting representatives, consider using the following points: - Express your concern about the negative impacts of tariff policies on both local and global economies. - Emphasize the importance of finding cooperative solutions that foster trade relationships rather than punitive measures that harm job creation. - Advocate for policies that support small businesses and ethical trade practices, highlighting the long-term benefits of stability in trade relationships.
By taking these steps, individuals can contribute to a broader movement advocating for fair trade practices and economic policies that promote stability and cooperation in the global economy.