UBS Economics-China Economic Comment _Data preview Better FAI retail sa...-117630693

ab4 September 2025Global ResearchChina Economic CommentData preview: Better FAI & retail sales, cooler IP & exportsHigh frequency: slightly better PMIs, soft home sales, mixed port activitiesAugust NBS manufacturing PMI edged up by 0.1ppt to 49.4, and S&P Global China manufacturing PMI improved by 0.9ppt to 50.5, with new orders and production index both picking up. NBS non-manufacturing PMI edged up by 0.2ppt to 50.3 in August. 30-city property sales narrowed their decline to -10% YoY in August from -19% YoY in July, while top 100 developers' contract sales volume declined further to -29% YoY in August from -24% YoY before. Port cargo throughput growth cooled to 6% YoY in the first 24 days of August, from 10% YoY in July; while container throughput growth improved to 8% YoY (vs 4% YoY before). Auto retail sales growth softened to 3% YoY in the first 24 days, from 7% YoY in July; while auto wholesale growth stabilised at 12% YoY. Steel production growth narrowed decline to -1% YoY in the first 20 days from -4% YoY in July. See more in UBS China Activity Tracker and Appendix High Frequency Data Monitor.August data preview: FAI and retail sales rebounded, IP and exports cooledFor the upcoming August official data release, we expect subdued property sales (-6% to -8% YoY); a continued, deep decline in property investment (-14% to -16% YoY); an uptick of infrastructure FAI and manufacturing FAI, from a surprising YoY decline in July; slightly better retail sales growth (4.1% YoY); and softer growth of exports (4.5% YoY) and industrial production (5.4% YoY). The negative impact of heavy rain and a heatwave in July have likely diminished in August. TSF credit growth likely edged down to 8.8% YoY, partly on a high base for government bond issuance. CPI likely weakened to a small deflation again (-0.2% YoY), and PPI narrowed decline (-2.8% YoY). Additional policy support likely to be data dependent and modest in scaleThe government has continued to roll out planned macro support measures since July, including creating subsidies for childcare and preschool tuition, distributing the remaining trade-in subsidies in July and October, introducing a 1% interest subsidy on consumer loans and service industries’ borrowing, and reportedly asking central SOEs to participate in the inventory destocking programme. As growth headwinds unfold and growth momentum falters, we think the government may roll out additional broad fiscal stimulus to stabilise growth momentum in Q4, possibly underpinned by policy banks' special bond issuance. We maintain our baseline GDP growth forecast of 4.7% for 2025, with 4.5-5% YoY in Q3 and below 4% YoY in Q4. For more detail, see our anti-involution report and latest outlook. This report has been prepared by UBS Securities Asia Limited. ANALYST CERTIFICATION AND REQUIRED DISCLOSURES, including information on the Quantitative Research Review published by UBS, begin on page 10. EconomicsChinaNing ZhangEconomistning.zhang@ub