China’s unemployment rate rose from 5.2% in July to 5.3% in August. Crucially, youth unemployment soared to 18.9%, up from 17.8% in July and 14.5% in June.

Rising unemployment and the ongoing housing crisis have weighed on consumer sentiment, challenging Beijing’s efforts to boost private consumption. Retail sales increased 3.4% year-on-year in August 2025, down from 3.7% in July and 4.8% in June.

Another set of weak consumption reports may raise doubts about Beijing achieving its 5% GDP growth target. However, policymakers could respond with further stimulus measures to revive the economy.

Stimulus Expectations Build

Goldman Sachs economists have raised the chances of the People’s Bank of China cutting interest rates to support the economy. While recent data have raised doubts, some economists warn Beijing may hesitate to add support if growth momentum appears sufficient to meet the 5% target.

Last week, lawmakers pledged further support, highlighting Beijing’s concerns about the economic outlook. CN Wire reported that policymakers will continue to strengthen and timely intensify implementation of macro policies and roll out measures promptly as conditions evolve.

According to CN Wire, China’s NDRC stated:

“China’s economy still faces significant risks and challenges amid tough and complex external environment. Will accelerate adoption of smart devices and systems across industries by introducing innovative consumer subsidies on the demand side. Will continue to enhance economic monitoring, forecasting, and early warning; prepare policy.”

Mainland Equity Markets: Rally at Risk?

Mainland equity markets have enjoyed three strong quarters of gains, despite the slowdown in Q3.

China’s advancements in the AI space, chip development, and expectations of further stimulus have lifted sentiment. The CSI 300 is up 17.94% year-to-date (YTD) and at a three-year high. Meanwhile, the Shanghai Composite Index has advanced 15.84%, climbing to a 10-year high.

Mainland-listed stocks remain below record highs, suggesting room for further gains if Golden Week data and stimulus support align. However, weak Golden Week data and the absence of fresh stimulus could weigh on sentiment.

For contrast, the Hang Seng Index has soared 36% YTD as the Hang Seng Tech Index surged 48.8%.