Economists disagree on China’s July economic data, forecasting mixed trends in growth indicators.

    by VT Markets
    /
    Aug 14, 2025
    **China’s July Economic Data Preview** China will release its July economic data on August 15. Expectations are mixed. Some experts see signs of resilience, while others fear a slowdown in domestic activity. Analysts from ANZ Research predict gains in retail sales, industrial production, and fixed-asset investment. They believe these improvements will come from targeted policies and strong exports despite ongoing trade tensions. Conversely, Moody’s Analytics expects a general decline. They foresee retail sales growth slowing to 4% year-on-year, down from 4.8% in June. Industrial production growth may drop to 6.5% from 6.8%. Fixed-asset investment growth is likely to fall to 2.6% from 2.8%. They highlight weak confidence as a factor impacting investment and demand. Recent inflation data revealed a 3.6% year-on-year drop in the producer price index, with consumer prices staying steady. This indicates that deflationary pressures still affect parts of the economy. **Assessing China’s Policy Effectiveness** Many will closely monitor the upcoming data to judge the effectiveness of China’s policy measures. The results might show whether more stimulus is needed to support growth in the second half of the year. With crucial economic data set to be released tomorrow, we may see significant volatility. The split between optimistic and pessimistic forecasts means the market is prepared for surprises. Implied volatility for China-related assets is expected to rise, offering opportunities for options traders in the coming weeks. The overall trend looks weak, lending credibility to a cautious outlook. The recent 3.6% drop in the producer price index suggests that deflation is a persistent issue. We can’t overlook the ongoing challenges in the property sector, where new home sales fell over 25% year-on-year, continuing the trend from earlier in 2025. This potential slowdown impacts commodities directly. If industrial production falls short of expectations, we can expect further downward pressure on copper and iron ore futures. We experienced a similar trend in early 2025 when weak manufacturing data led to a sell-off in industrial metals. Given the uncertainty, using a strategy that profits from large movements, regardless of direction, seems wise. We are considering straddles on ETFs like the FXI, which means buying both a call and a put option with the same strike price and expiry. This strategy bets that the market will react more strongly than currently expected. The currency market is also crucial to watch. If the data disappoints, the offshore yuan (CNH) may weaken against the dollar. The People’s Bank of China has previously intervened to slow the yuan’s decline, as seen in late 2024, so we expect to see fluctuations. Looking back at 2024, we recall that initial market optimism from policy support often faded when economic data showed weaker-than-expected recovery. This history suggests we should be cautious about any early positive market reactions. A relief rally from better-than-expected numbers may present a chance to position for a downturn if underlying weaknesses persist. Create your live VT Markets account and start trading now.

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