China’s economy clocked its deepest slowdown of the year in July, raising expectations for Beijing to roll out more stimulus this year to offset the impact of Donald Trump’s trade war.

A campaign to curb overcapacity at home is adding to the sting of higher tariffs. Fixed-asset investment fell the most since Covid erupted in early 2020, with industrial activity growth the weakest in eight months — a sign that a front-loading factory boom to get ahead of U.S. duties of more than 50% is waning.

Weaker spending on infrastructure and consumption also was a key culprit behind the slowdown, revealing the extent to which private demand remains frail.

“It does seem like the U.S. tariffs are just starting to bite,” said Duncan Wrigley, chief China economist at Pantheon Economics. “Domestic deman

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