# Power Blocs

By [DYLIT Chronicles](https://dylit.info/user/dylitmediabuzz)

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Xi Jinping Warns of "High Winds and Rough Waters" as China's Growth Falters in Second Half A Warning Tied to Mounting Economic Strain Speaking on August 17 at an event marking the 100th anniversary of former President Jiang Zemin's birth, Chinese leader Xi Jinping warned that the country faces "high winds and rough waters and even dangerous storms" ahead. The remarks, Xi's first public appearance in roughly two weeks following the leadership's traditional summer retreat, came as Beijing prepares for an expected September meeting between Xi and US President Donald Trump, with trade, technology and Taiwan among the strains on the relationship. The speech also unfolded against a backdrop of Middle East conflict disrupting global trade and unresolved maritime tensions with the Philippines and Japan. Notably, the address came the same day official data confirmed a sluggish start to the second half of 2026, with industrial output, consumption and investment all falling short of forecasts. A Weak Start to the Second Half China's economy grew 4.3% in the second quarter, below the government's 4.5–5% annual target range and its weakest pace in more than three years. Data released August 17 showed July industrial output rising 4.5% year-on-year, down from 5.3% in June and short of the 4.8% forecast. The official manufacturing purchasing managers' index unexpectedly slipped into contraction. The National Bureau of Statistics said the economy had remained "stable" overall but acknowledged the external environment was "complicated and volatile," with domestic demand still weak and some companies facing "operational difficulties." Statistics bureau spokesperson Fu Linghui pointed to geopolitical pressure abroad and unusually severe summer weather, including three typhoons that disrupted eastern and southern manufacturing hubs, as factors weighing on the month's results. Consumption and Investment Falter, Unemployment Ticks Up Retail sales, a key gauge of consumption, rose just 0.6% year-on-year in July, down from 1% in June and well short of the 1.5% forecast, despite summer tourism spending. Car sales fell for a tenth straight month, dropping 17%, though excluding autos retail sales rose 2.5%. Citi analysts noted that daily spending under government trade-in subsidies for autos and appliances dropped to roughly 6.3 billion yuan from 9 billion yuan in June. Fixed-asset investment contracted 6.7% in the first seven months of the year, a steeper decline than the 5.7% drop recorded through June and worse than the 6% contraction analysts had expected. The urban unemployment rate rose to 5.2% in July from 5% in June, adding to pressure on policymakers to strengthen support in the second half. Property Slump Shows No Sign of Ending China's prolonged real estate downturn deepened further. New home prices across 70 major cities fell 3.2% year-on-year in July, marking the 37th consecutive month of decline, though the pace eased slightly from June's 3.3% drop. Real estate development investment plunged 19.2% in the first seven months of the year, while new housing starts fell 24% and completions dropped 23.2%. Sales by floor area declined 11.8%, and by value fell 13.1%. Of the 70 cities tracked, only 17 recorded month-on-month price gains in July, with Shanghai remaining a notable outlier posting continued growth. A Politburo meeting on July 30 pledged faster fiscal spending and new support measures but stopped short of a major stimulus package, and did not signal stronger intervention for housing specifically. Exports Offer a Cushion, But Carry Risks Exports remained the economy's clearest bright spot, rising 23.9% year-on-year in July, though slowing from June's 27% surge. Growth was driven by strong global demand for AI-related technology, with semiconductor export values nearly doubling and overall high-tech exports up 40.7%. China posted another monthly trade surplus above $100 billion, putting the full-year total on track to exceed $1 trillion for a second consecutive year. However, economists caution this reliance leaves the economy exposed: a new 12.5% US tariff took effect in late July, and traditional manufacturing sectors such as ceramics saw exports slump 28.3%, underscoring what analysts describe as an increasingly "two-speed" economy split between booming tech exporters and a broader domestic sector still searching for firmer footing.   Sources Bloomberg — Xi Ties Predecessor's Legacy to His Own Agenda as Risks Grow https://www.bloomberg.com/news/articles/2026-08-17/xi-touts-party-led-growth-at-predecessor-s-birth-centenary CNBC — China's economy slows further in July as retail sales barely grow, investment slump steepens https://www.cnbc.com/2026/08/17/china-economy-sales-investment-july-.html CNBC — China's exports growth beats estimates in July, as AI-driven shipments surge https://www.cnbc.com/2026/08/07/china-july-trade-exports-imports-surplus-imbalance-tariffs-.html Bloomberg — China New Home Prices Fall at Faster Pace, Damping Rebound Hopes https://www.bloomberg.com/news/articles/2026-08-17/china-new-home-prices-fall-at-faster-pace-damping-rebound-hopes Related YouTube Videos Bloomberg Television — China's GDP Growth Weakens to Below Target Range | The China Show | 7/15/2026 — https://www.youtube.com/watch?v=-5Z19XVaWbg Firstpost — Why China's Slowdown May Continue in 2026 | Vantage with Palki Sharma | N18G — https://www.youtube.com/watch?v=D5CEh01n3tw Firstpost — China's Economy Is Stalling Faster Than Expected | Vantage with Palki Sharma | N18G — https://www.youtube.com/watch?v=wg5CyHUExNs Digging into China — The Twin Crises Facing Xi Jinping: Economic Stagnation and Diplomatic Isolation — https://www.youtube.com/watch?v=xBN2lOkFacY