China’s economy experienced further slowdown in October, weighed down by weakening consumer demand and the ongoing real estate crisis, in addition to the impact of the long national holiday that affected industrial production.
Data from the National Bureau of Statistics showed that fixed-asset investment — including the property sector — fell by 1.7% in the first ten months of the year, compared with a 0.5% decline between January and September. Analysts surveyed by Reuters had expected a contraction of around 0.8%. This marks the first decline in investment since 2020 during the COVID-19 pandemic, according to historical records from Wind Information dating back to 1992.
Industrial Output and Activity Indicators
Industrial output grew by 4.9% in October, down from a 6.5% increase in September, though still surpassing forecasts of 5.5% growth. Meanwhile, manufacturing activity dropped to its lowest level in six months, impacted by a holiday period from October 1 to 8, which led to the shutdown of most factories nationwide.
Retail sales rose 2.9% year-on-year, slightly above expectations of 2.8%, but still below the 3% growth recorded in September. Urban unemployment declined to 5.1%, compared with 5.2% the previous month.
Property Sector, Inflation, and Trade
Qiu Zhang, President and Chief Economist at Pinpoint Asset Management, explained that the sharp drop in fixed-asset investment was mainly driven by weak spending in the real estate and infrastructure sectors.
The consumer price index increased by 0.2% year-on-year — the strongest inflation reading since January and the first positive rise since June. Core inflation, excluding food and energy, climbed 1.2%, its highest level since February 2024.
In external trade, China’s exports unexpectedly contracted in October for the first time in nearly two years, as shipments to the United States declined amid escalating trade tensions ahead of a new agreement. Last month, U.S. President Donald Trump and Chinese President Xi Jinping agreed to reduce reciprocal tariffs and suspend a set of restrictive measures for one year.
Despite the mixed signals, Zhang expects Chinese policymakers to refrain from announcing further stimulus measures for the rest of the year, as the economy appears on track to meet the 5% growth target.
China’s economic growth slowed to 4.8% in the third quarter, compared with 5.2% in the second quarter and 5.4% in the first.
