China's economy cools further, investment growth at record low

China’s economy is showing signs of cooling further as the U.S. prepares even tougher trade tariffs, with investment growth slowing to a record low and consumers turning more cautious about spending, data showed on Tuesday.

Fixed-asset investment expanded by a less-than-expected 5.5 percent in January-July, a result of Beijing’s crackdown on lavish local government borrowing for projects to boost growth. Industrial output also undershot expectations, weighed down by pollution curbs and the uncertain trade outlook.

With the trade war threatening more pressure on China’s already slowing economy, Beijing has shifted its focus to boosting domestic demand and is taking a more measured approach in its campaign to reduce financial risks and debt, which has pushed up borrowing costs and triggered a rising number of defaults.

Retail sales also missed expectations, with Chinese consumers more reluctant to spend on everything from cosmetics and other everyday goods to big-ticket items such as home appliances and furniture. Sales rose 8.8 percent in July from a year earlier, below an expected 9.1 percent and down from 9.0 percent in June, despite a broad import tax cut that kicked in last month. Real estate investment jumped 13.2 percent in July on-year, the fastest in nearly two years and higher than June’s 8.4 percent rise, according to Reuters calculations.