On November 14, the National Bureau of Statistics released China's economic growth data for October 2025. Overall, macroeconomic policies worked in synergy during the month, supporting steady growth in production and demand, stable employment and prices, and continued industrial transformation. The economy maintained a stable and progressive trajectory, though structural divergences were evident across key indicators. Industrial production remained robust, while consumption and investment saw notable declines. With incremental policy measures gradually taking effect, macroeconomic data is expected to show marginal improvement in November-December, helping achieve annual targets as planned.
**Understanding October’s Economic Volatility** 1. **Fiscal Front-Loading and Base Effects** The "high first, low later" pattern in annual growth stems from early fiscal stimulus and high base effects from 2024. Fiscal policy significantly influenced domestic demand this year, with front-loaded support leading to a slowdown in broad fiscal expenditure in September-October. Excluding bank capital injections and debt resolution—which don’t directly contribute to physical output—broad fiscal spending decelerated markedly. Meanwhile, accelerated fiscal efforts post-September 2024 created a high base, impacting Q4 2025 readings.
The slowdown in fiscal momentum reflects reduced available funds. However, the rollout of ¥500 billion in new policy-backed financial instruments and additional fiscal allocations is expected to stabilize broad fiscal support in Q4, underpinning economic activity.
2. **Divergence Between Consumption and Investment** While both investment and consumption were shaped by policies like the "dual priorities and dual innovations," their October performances diverged sharply.
- **Investment**: Growth turned negative, with manufacturing investment down 6.7% YoY, while infrastructure and real estate fell 12.1% and 23.1%, respectively. This reflects tighter fiscal spending and initial adjustments under "anti-involution" policies. - **Consumption**: Despite marginal softening, resilience exceeded expectations. Subsidized goods maintained growth, and ex-auto sales accelerated, buoyed by holiday demand and early "Double 11" promotions.
**Industrial Production Holds Steady** Industrial output grew 4.9% YoY in October (down 1.6 pp from September), with year-to-date growth at 6.1%. Mining and manufacturing slowed, while utilities surged. Equipment manufacturing, led by autos (+16.8%) and electronics (+8.9%), remained a pillar, contributing 36.1% of industrial output.
**Consumption Resilience** Retail sales rose 2.9% YoY (4.0% ex-auto), with services and essentials outperforming. Catering rebounded (+3.8%), while furniture/appliances dipped due to base effects.
**Investment Slowdown Deepens** Fixed-asset investment fell 1.7% YTD, with private investment down 4.5%. Manufacturing (+2.7%) and infrastructure (+1.5%) lost momentum. Property investment slid 14.7%, with sales and construction metrics deteriorating further.
**Risks**: Subpar macro performance, global volatility, and historical deviations.
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