Key Economic Indicators for China Released on September 14, 2017 indicate a slowdown in both demand and supply. Industrial output in August grew by 6.0% year-on-year, a significant drop from July's 6.4%. Meanwhile, investment in fixed assets grew by 7.8% from January to July, down from 8.3% during the same period last year. Similarly, retail sales in August increased by 10.1% year-on-year, slowing from 10.4% in July. The slowdown in investment is primarily due to a decline in private sector investment, which accounts for about 60% of total investment. From January to August, private sector investment slowed to 6.4% from 6.9% in the first seven months of the year.

          Although the economic data above seems to contradict the relatively bright Purchasing Managers' Index (PMI) figures released earlier, a deeper analysis reveals that despite the seemingly strong PMI numbers, there is economic weakness in certain sectors. The official manufacturing PMI, announced on August 31, improved to 51.7 from 51.4 in July. Additionally, the Caixin manufacturing PMI, which focuses on smaller companies, rose from 51.1 in July to 51.6 in August, indicating that growth in the manufacturing sector was broadly distributed during that month. However, the official services PMI declined to 53.4 from 54.5 in July, suggesting that the services sector, which accounted for 51.6% of GDP in 2016, is weakening. 

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