Guo-Chen Wang, an Assistant Research Fellow at the First Research Division of the Chung-Hua Institution for Economic Research (CIER), pointed out that while official figures reported a 3.7% year-over-year increase in total retail sales of social consumer goods for July, the actual growth was only about 2.7%. This marks the fifth consecutive month of overestimation by approximately one percentage point. The research indicates that for the first half of 2025, official data showed a 5.0% year-over-year increase, while the actual figure was only 4.2%. Major metropolitan areas, such as Beijing, Shanghai, and Guangzhou, even saw a year-over-year decline of 4.4%, highlighting sluggish consumption in first-tier cities.
Guo-Chen Wang believes that among 28 provinces and municipalities, only the data from Henan aligns with official statistics. Most others exhibit signs of overestimation, with some even underreporting, which suggests that local governments may be manipulating data under fiscal pressure. Since the pandemic, the vitality of consumption in first-tier cities has declined, creating a discrepancy with the official narrative of a “stable market.” This reflects unresolved structural weaknesses in China’s economy, and the growing atmosphere of local government “inaction” could become a new factor driving recession.
U.S. Advances Digital Finance Legislation, Deepening Interconnection of Dollar, U.S. Treasuries, and Global Finance
Meanwhile, U.S. President Donald Trump signed the Guaranteed and ‘Enhanced’ Net-value for Unrestricted Internal Stablecoins Act (GENIUS Act) on July 18, establishing the first-ever regulatory framework for payment stablecoins. The law requires issuers to hold 1:1 reserves, limited to highly secure assets such as U.S. dollars, short-term Treasury securities, central bank funds, or deposits at regulated institutions. This move is not only expected to support demand for U.S. Treasuries but is also seen as a significant step toward consolidating the international status of the dollar.
Lee-Rong Wang, a consultant at CIER’s Center for Economic Forecasting, analyzed that the stablecoin legislation will drive real-world asset (RWA) tokenization and digital finance applications, providing short-term support for the U.S. dollar. However, the U.S. dollar, stablecoins, and U.S. Treasury bonds are highly correlated, creating a situation where “they all prosper together or fall together.” If inflationary and tariff pressures cause the dollar to weaken, the massive demand for stablecoins could backfire, with repercussions spilling over into the physical financial system through RWA.
Although the act may help suppress U.S. Treasury yields and reduce government interest expenses, a prolonged low-interest environment could revive concerns about national debt expansion, echoing the aftermath of the financial crisis. Lee-Rong Wang concluded that while the U.S. has taken a significant step forward in digital finance, it has also deepened the interconnected risks among the U.S. dollar, U.S. Treasuries, and the global financial system.
Author: CIER Editorial Team
Date: August 28, 2025