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The latest round of disappointing economic data from China is intensifying pressure on Beijing to further loosen its fiscal policies, and possibly even consider issuing shopping vouchers to revive growth and meet this year's target of around 5%.

After a lackluster second quarter, the world's second-largest economy continued to lose momentum in July, with new home prices falling at their fastest pace in nine years, industrial output slowing, and declines in both export and investment growth, coupled with rising unemployment.

Some data points exceeded forecasts, but for reasons that don't inspire confidence. Rising inflation, for instance, was blamed on adverse weather conditions rather than stronger domestic demand. A surge in imports was largely due to frontloaded purchases of chips ahead of expected U.S. technology restrictions, and a modest increase in retail sales was more a reflection of weak comparatives from 2023 than genuine consumer strength.

This combination of indicators paints a bleak picture for Chinese policymakers, who may have little choice but to ramp up stimulus measures-unless they are willing to accept slower growth and risk a further erosion of consumer and business confidence.

China took similar steps last October, increasing its deficit from 3.0% to 3.8% of GDP and frontloading a portion of the 2024 local government debt quotas for investment in flood prevention and infrastructure. However, this year might see a shift in how the extra funds are allocated.

Traditional infrastructure spending, which has driven growth for decades, is yielding diminishing returns after extensive investment in bridges, roads, and railways. Meanwhile, China's focus on advanced manufacturing is stoking trade tensions and raising concerns over industrial overcapacity and factory gate deflation.

As Chinese consumers cut back on spending, e-commerce giants are resorting to deep discounts and aggressive promotions to attract shoppers, which is squeezing margins across the retail sector. Alibaba Group Holding, for instance, missed market expectations for revenue recently, as domestic e-commerce sales were pressured by cautious consumer spending.

A high-level policy meeting in July hinted at a gradual shift towards consumer stimulus, signaling that the old methods of driving growth might not be as effective as before. This week, state media revived the idea of direct consumer support -- an approach used during the pandemic in the US and other countries, but so far resisted by Beijing.

China Daily, quoting three economists from government-backed think tanks, suggested that the government "should consider additional direct support to consumers worth at least 1 trillion yuan ($139 billion) - either in cash or vouchers." This amount represents roughly 0.8% of last year's GDP and could mark a significant shift in China's economic strategy.