September 7, 2026 (InvestinChina.asia) – China’s economy likely sustained a pattern of “internal-external divergence” in August — domestic demand ran soft while exports stayed resilient, and both consumer and producer prices edged higher on input-cost pressures, according to a forward-looking assessment published September 6 by CICC Research. The investment bank expects aggregate financing and M2 money supply growth to slow further, underscoring persistent weakness in credit demand.

CICC’s macro team, led by Zhang Wenlang, projects that August retail sales growth recovered to around 1% year-on-year, up from a softer July base, helped by fading weather disruptions, the summer travel peak, and favorable year-earlier comparisons. Durable goods consumption remained split: passenger car retail sales fell 21.7% year-on-year — a slightly wider decline than in July, per the China Passenger Car Association — while home appliance sales showed narrowing contractions, with the four-week moving average for four major appliance categories improving to -7.7% from -11.8% in July. Offline consumption also staged a marginal recovery, with urban shopping district foot traffic and hotel revenue per available room (RevPAR) both posting smaller year-on-year declines.

Fixed asset investment told a darker story. CICC expects January–August FAI to have contracted 7.2% year-on-year, widening from the -6.7% drop recorded in the first seven months. Manufacturing investment likely declined 2.0% on a cumulative basis, and infrastructure investment slipped to -4.0%, despite some narrowing in month-on-month cement shipments and asphalt operating rates. The team notes that fresh support from new policy-backed financial instruments and ultra-long special treasury bonds has yet to fully filter through to real project execution.

The property sector remained under pressure. Sales of new homes across 30 major cities swung from a 2.8% year-on-year increase in July to a 6.3% decline in August, weighed down by the traditional off-season and cautious developer launch schedules. Land market activity continued to contract in volume but improved in value — floor area transacted in 300 cities fell 22.2% year-on-year, a deeper drop than July’s 13.3%, yet total land sales value rose 34.6% thanks to premium parcels sold in core cities such as Beijing and Shanghai. CICC projects January–August real estate development investment at approximately -19.8%, slightly worse than the -19.2% recorded in the first seven months.

Foreign trade proved a bright spot. Although Typhoon-related disruptions temporarily hit port operations in mid-August, throughput rebounded quickly, and CICC expects August exports to have grown 23.8% year-on-year — essentially flat against July’s 23.9% — with imports accelerating to 30.1% from 27.6%. Supporting evidence came from South Korea’s trade data, where daily average exports surged 72.6% year-on-year, and semiconductor exports soared 216%, reflecting robust global AI-driven demand that continues to pull Chinese shipments.

Industrial production held steady, with CICC projecting August industrial value-added growth at 4.6% year-on-year, a modest pickup from July’s 4.5%. The PMI production sub-index rose 0.5 percentage points to 50.4%, even as high-frequency operating rates across major industries mostly weakened on weather and soft domestic demand.

On prices, CICC sees both CPI and PPI ticking upward. August CPI is expected to rise to around 0.7% year-on-year from 0.5% in July, driven by pork prices — which gained 2.1% month-on-month as breeders slowed slaughter — alongside higher fuel costs from late-July domestic refined oil price adjustments. Core inflation likely stayed broadly stable. PPI is projected to climb to around 3.7% year-on-year from 3.5%, with the PMI raw material purchase price index jumping 3.4 percentage points to 56.6%, implying a monthly PPI gain of about 0.2% versus July’s -0.7%. Brent crude averaged 4.9% higher month-on-month, and copper prices extended gains on mine-side tightness and tariff-driven inventory reallocation, though rebar and building materials remained subdued on tepid construction demand.

The financial data picture is less reassuring. CICC expects August new RMB loans of around 270 billion yuan and new total social financing (TSF) of roughly 1.9 trillion yuan. Net government bond issuance of about 1.1 trillion yuan fell short of the team’s early-month estimate of 1.3 trillion and was roughly 270 billion yuan lower than a year earlier, reflecting delays in translating local infrastructure projects into actual financing. Three-month bill discount rates at major state-owned banks hovered at a low 0.5% through month-end without the typical spike, signaling banks’ reliance on direct-discount bills to meet lending targets amid weak genuine loan demand. As a result, CICC projects outstanding TSF growth slowing to 7.2% year-on-year from 7.4% in July, while M2 money supply growth eases to 7.5% from 7.7%.

The assessment underscores a familiar tension in China’s current cycle: external engines are firing, but internal ones are sputtering. With credit demand sluggish and fiscal disbursement lagging, CICC’s analysts imply that the effectiveness of recently announced policy tools — including the yet-to-be-deployed new policy-backed financial instruments — will be the decisive variable for whether the economy’s “micro-glimmers” of improvement can coalesce into a firmer recovery trend in the coming months.