Economy lags in July under pressure from tariffs and a weak property market

China’s economy showed signs of slowing in July as factory output and retail sales slowed and housing prices dropped further, according to data released Friday.

Uncertainty over tariffs on exports to the United States is still looming over the world’s second-largest economy after President Donald Trump extended a pause in sharp hikes in import duties for 90 days, beginning today, following a 90-day pause that began in May.

As officials worked toward a broader trade agreement, China reported earlier that its exports surged 7.2% in July year-on-year, while its imports grew at the fastest pace in a year, as businesses rushed to take advantage of the truce in Trump’s trade war with Beijing.

But that also reflected a lower base for comparison, and manufacturers have slowed investments, hiring and production as they watch to see what comes. Chinese manufacturers also have ramped up shipments to Southeast Asia, Africa and other regions to help offset lost business in the U.S.

“Exports remained a bright spot although the boost from front-loading appears to be tapering off and has started to show up in weak industrial production, as we anticipated,” Oxford Economics’ Sheana Yue wrote in a report.

China also has been enduring flooding from torrential seasonal rains that have disrupted business activity in many parts of the country

The statistics bureau’s report said the economy had shown “notable resilience and vitality against the complex and volatile external environment and adverse impacts from extreme domestic weather.”

Annual growth in industrial output slowed to 5.7% in July from 6.8% in June, the National Bureau of Statistics said. That was an 8-month low.

Investments in factory equipment and other fixed assets rose a meager 1.6% in January-July, compared with 2.8% growth in the first half of the year.

“Chinese economic activity slowed across the board in July, with retail sales, fixed asset investment, and value added of industry growth all reaching the lowest levels of the year,” Lynne Song of ING Economics said in a report.

Property investments plunged 12% in the first seven months of the year, with residential housing investment dropping nearly 11%.

Prices for newly built housing in major cities fell 1.1%, as a prolonged downturn in the property industry lingered.

Yue of Oxford Economics said prices could continue to fall before stabilizing in 2028.

The meltdown in the housing market hit just as the COVID -19 pandemic began, sapping one of the economy’s main drivers of growth and causing dozens of developers to default on their debts.

The crisis rippled throughout the economy, destroying jobs for millions of people.

The government has sought to ensure that most housing that was paid for gets built, but sales remain weak despite a series of moves meant to entice families into back into the market.

Since most Chinese families have their wealth tied up in property, the anemic housing market has been a major factor crimping consumer spending. In July, retail sales rose 3.7%, the slowest rate in seven months and down from a 4.8% increase in June.

The unemployment rate rose to 5.2% from 5% as university graduates began looking for work.

While consumer prices rose 0.4% in July from the month before, prices at the wholesale level slipped 3.6% from a year earlier in another indicator of relatively weak demand. ELAINE KURTENBACH, BANGKOK, MDT/AP