Explained: Why world is feeling the heat of China’s economic meltdown – India Today
China’s economy took another hit in August, with fresh data showing a sharp drop in investment and weaker growth in both industrial output and consumer spending.
According to the National Bureau of Statistics, factory and mining production rose by 5.2% compared to last year — the slowest pace since August 2024. Retail sales also disappointed, climbing just 3.4%, down from July’s 3.7% and below expectations.
Investment was the hardest hit. Fixed-asset investment, which covers spending on things like infrastructure, machinery, and real estate, grew only 0.5% in the first eight months of 2025 — the weakest result since 2020. Key industries such as pharmaceuticals, machinery, and chemicals saw significant declines, along with education and healthcare.
Unemployment also inched up, with the urban jobless rate rising to 5.3%.
Why it matters
This slowdown follows strong growth in the first half of the year, when China’s economy expanded by 5.3%. However, analysts now expect a weaker finish to 2025 as exports lose momentum and U.S. tariffs under President Donald Trump add extra pressure.
Despite the recent slump, Chinese leaders remain confident about meeting their full-year growth target of around 5%. So far, they’ve avoided launching major new stimulus measures, betting that resilient exports and targeted support will be enough to keep the economy on track.
Still, many economists believe policymakers may need to step in with more monetary easing or support for businesses and jobs if the slowdown deepens.
Global ripple effect
China is expected to remain the single biggest driver of global growth over the next five years. Any significant cooling in its economy could have serious consequences for the world economy, which is already under strain from weak demand and trade tensions.
As the National Bureau of Statistics put it: the economy faces “many risks and challenges,” from unstable global markets to domestic job losses and slowing demand.
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