Friday’s October data from China showed the clearest sign yet that momentum in the world’s second-largest economy is fading on multiple fronts. Official figures and parallel reports from Bloomberg and Reuters show retail sales up just 2.9% year on year, the weakest pace since August 2024 and the fifth straight month of deceleration, despite support from Singles’ Day promotions.
Industrial production also disappointed, rising 4.9% versus expectations around 5.5%, while fixed-asset investment over January–October fell 1.7%, a rare and deepening contraction. Economists highlight a “twin squeeze”: external demand is softening again despite a recent U.S.-China tariff truce, and domestic demand is hamstrung by a prolonged property bust, falling home prices in most major cities, and cautious local governments constrained by heavy debts.
Beijing still targets about 5% growth in 2025, and officials note that only modest fourth-quarter expansion is needed to hit that goal. That math reduces their urgency to unleash large-scale stimulus, especially in housing, where policymakers remain wary of reigniting excesses. Instead, the latest Communist Party economic conclave emphasized gradually boosting household consumption’s share of GDP through reforms to income distribution and the social safety net rather than another infrastructure binge.
For global investors and companies, the data underscore that China is no longer reliably providing a powerful growth impulse. Commodity exporters and European and Asian manufacturers exposed to Chinese capex and construction are most at risk, while multinational consumer brands face a more subdued backdrop than headline GDP suggests. The key question for 2026 is whether incremental reforms and modest easing can offset structural drags from demographics, property deleveraging, and geopolitics, or whether a more decisive policy shift becomes unavoidable.
