China’s retail sales and industrial production grew at a slower pace in July, official data showed on Monday, missing market expectations and highlighting continued weakness in domestic demand.

Retail sales increased 0.6 per cent year-on-year in July, down from one per cent in June and below the 1.5 per cent growth forecast in a Bloomberg survey.

Industrial production also slowed, rising 4.5 per cent year-on-year in July compared with 5.3 per cent in June. The figure fell short of the five per cent growth expected by analysts.

The weaker figures underline the challenges facing Beijing as it seeks to revive consumer spending and sustain economic growth following the Covid-19 pandemic.

China has set a 2026 economic growth target of between 4.5 and five per cent, its lowest official target in decades. The economy, however, grew below that range in the second quarter.

National Bureau of Statistics spokesman Fu Linghui said geopolitical tensions and instability in global energy markets, alongside severe weather in parts of China, had affected economic activity.

Fixed-asset investment also declined 6.7 per cent year-on-year between January and July, adding to concerns over the pace of domestic investment.

Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said the latest figures pointed to further downside risks and called for a stronger policy response.

Economists have increasingly urged China to reduce its reliance on property and infrastructure investment and strengthen household consumption as a driver of growth.

Strong exports, particularly of artificial intelligence-related technology products, have provided some support to China’s manufacturing sector. However, analysts say continued weakness in domestic demand remains a major challenge for the world’s second-largest economy.