China faced deepening economic headwinds in July, state data showed, as consumer spending and investment slumped further.
China’s consistently weak domestic demand has long been outmatched by the country’s vast manufacturing capacity, leading firms to expand aggressively in — and grow increasingly dependent on — overseas markets to drive growth.
That gap could widen, as Beijing directs more investment into AI to keep pace with the US, “turbocharging an already production-heavy economic model,” Axios wrote.
Greater shipments of semiconductors and other components have boosted export growth, but escalation in the Middle East and weaker domestic spending “mean that the balance of risks to the Chinese economy is shifting into a negative direction again,” an ABN Amro economist wrote in a client note.