Beijing: China's factory output and retail sales grew at their slowest pace in over a year in October, intensifying pressure on policymakers to revive the $19 trillion export-driven economy. The mounting supply and demand challenges threaten to further reduce growth prospects.
According to Yemen News Agency, officials responsible for sustaining the world's second-largest economy have long faced a dilemma: to stimulate industrial production for boosting exports when domestic consumer spending declines, or to utilize public funds for infrastructure projects that boost GDP. However, the ongoing US tariff war has underscored that China's dependence on the world's largest consumer market is insufficient for substantial growth by merely expanding industrial infrastructure.
Recent figures offer little optimism for a quick recovery. Data from the National Bureau of Statistics revealed that industrial output grew by 4.9% year-on-year in October, marking the weakest annual pace since August 2024, compared to a 6.5% increase in September. Retail sales, an indicator of consumption, expanded by 2.9% last month, also marking its slowest pace since August 2024, down from a 3% increase in September and falling short of expectations for a 2.8% rise.
"The Chinese economy is under pressure from all sides," stated Fred Neumann, chief Asia economist at HSBC. Policymakers are aware of the need for reform to address imbalances between supply and demand, boost household consumption, and tackle high local government debt levels. Nonetheless, they recognize that structural reform will be challenging and politically risky, especially as the trade war with the US has further strained the economy.
Separate data released last week indicated that China's exports unexpectedly declined in October as producers struggled to maintain profitability in other markets after months of pre-loading goods to circumvent the threat of US tariffs.