China: Growth risks and stimulus watch – TD Securities

TD Securities’ Alex Loo highlights that China’s July data showed weaker industrial production, modest retail sales and record-weak Fixed Assets Investment, reinforcing concerns about insufficient domestic demand. The report warns that if economic momentum keeps fading, Beijing risks missing its 2026 GDP target of 4.5–5.0% and may respond with stronger counter-cyclical measures and fresh stimulus signals at the September Politburo (Economic) meeting.

Weak data raise pressure for stimulus

"China's economic data disappointed in July, starting off the second half of 2026 on a weak footing. If economic momentum continues to wane, policymakers may miss their GDP target of "4.5-5.0" for 2026 and we could see fresh stimulus announcements at the September Politburo meeting."

"China’s July activity data increases the urgency for policymakers to heed President Xi's call for stronger counter-cyclical adjustments from the July Politburo meeting."

"We believe the main narrative for China's economic outlook remains the same; a lack of domestic demand is still a pain point for China policymakers."

"Economic momentum is waning and could be a major worry for policymakers if August economic data does not show signs of a rebound. The next platform for fresh major stimulus would be the September Politburo (Economic) meeting."

"If economic momentum continues to wane, policymakers may miss its GDP target of "4.5-5.0" for 2026 and we could see fresh stimulus announcements at the September Politburo meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)