Weak domestic demand and an expected surge in infrastructure spending

CHINA FINANCIAL - Report 27 Jul 2026 by Michael Pettis

Special points to highlight in this report:

* China’s trade and domestic data continue to tell the same story that it has over the past few years, that China is till struggling to boost the role of domestic consumption — and domestic demand more generally — to drive economic growth.

* The growing willingness of prominent economists to discuss publicly China's debt overhang, unhealthy growth, and weak labor market may signal rising concern in Beijing and a shift in how policymakers are thinking about the economy's underlying problems.

* With household consumption continuing to weaken, Beijing appears likely to turn to infrastructure investment to support growth.

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