China's Slowing Economy Casts Shadow Over Asian Markets

On August 15, 2025, the Asian markets have experienced a mixed performance. In Japan, the Nikkei index rose to a new record high after the country's Q2 GDP grew by 0.3%, which was better than expected. However, the Hang Seng in Hong Kong fell by almost 1%.

Meanwhile, China's economy is showing signs of slowing down. According to data released today, the country's factory output and retail sales slowed in July, and housing prices dropped further. The uncertainty over tariffs on exports to the United States is still a concern for the world's second-largest economy, as President Trump has extended a pause in sharp hikes in import duties for another 90 days.

Interestingly, the Shanghai Composite, the main index in mainland China, rose today. This comes as Russian President Vladimir Putin has sought to strengthen his rapport with Donald Trump, praising the US leader's efforts to broker an end to the war in Ukraine and dangling the promise of economic cooperation and a new arms control treaty. However, Trump has sought to dial back hopes for a breakthrough, and he has also had to reassure allies that he won't negotiate the swap of territories at the summit.

On the economic front, the focus will be on the retail sales data, which is expected to show a solid increase in July, driven by incentives that boosted vehicle purchases and a surge in online spending during Amazon's Prime Day event. This data will provide more clues as to whether Trump's tariffs are impacting consumer spending habits.