This October, China recorded a troubling mix of weak investment, cooling factory production and softening consumer spending. Fixed-asset investment, a key gauge of long-term economic health, shrank by 1.7 % over the first ten months—its steepest decline since the pandemic. At the same time, industrial output rose just 4.9 % year-on-year in October, down from 6.5 % in September, while retail sales posted a modest 2.9 % gain. The crunch in the property sector remains a major drag, raising fresh questions over how much stimulus Beijing is willing to deploy.

Investment Downturn Deepens

Investment in fixed assets—including infrastructure, machinery and real estate—fell by 1.7 % in the January–October period compared with the same period last year, worsening from a 0.5 % drop in the first nine months. Analysts had expected around a 0.8 % decline.
Within that total:

• Real-estate investment plunged 14.7 % year-on-year for the first ten months, down from a 13.9 % decline in the first nine months.
• Manufacturing investment actually rose by 2.7 % in the same period.
• Utilities spending (electricity, fuel, water) jumped 12.5 %.
• Excluding real-estate, fixed-asset investment was up 1.7 %.

For October alone, investment fell 11.4 % year-on-year according to some estimates, representing the weakest monthly reading since early 2020.

The sharp drop in investment reflects both the lingering damage from the property slump and Beijing’s efforts to rein in excess capacity in heavy industry. With investor sentiment fragile, companies are holding back and new project starts are thinning.

Industry and Consumption: Signs of Fatigue

Factory output

Industrial production grew by 4.9 % in October compared with a 6.5 % increase in September, and fell short of market expectations around 5.5 %. The slowdown partly stems from the week-long national holiday (Oct 1–8) which reduced manufacturing activity, but also signals faltering external and domestic demand.

Retail and consumer spending

Retail sales in October rose by 2.9 % year-on-year, slightly above forecasts of 2.8 %, but still the weakest growth since August of last year. Growth in September had been 3.0 %.

• Urban retail sales reached 4,002.1 billion yuan, up 2.7 % year-on-year.
• Rural retail sales were 627.0 billion yuan, rising 4.1 %.
• Online retail of physical goods hit 10,398.4 billion yuan, up 6.3 % and constituting 25.2 % of total retail sales.

These figures suggest that, while consumption remains positive, momentum is fading—especially when weighed against mounting headwinds in employment, wealth and property.

Labour market & inflation

The surveyed urban unemployment rate ticked down to 5.1 % in October from 5.2 % in September.
Consumer price inflation rose 0.2 % year-on-year for October—the strongest reading since January and marking the first positive growth since June. Core CPI (excluding food and energy) climbed 1.2 %, the highest since February.

Property Market Weighs Heavily

The property sector remains a major brake on growth: new-home prices fell 0.5 % month-on-month in October, the steepest drop since October last year, and 2.2 % year-on-year. Meanwhile, the floor space of newly built commercial buildings sold fell by 6.8 % for the first ten months, while total sales of newly built commercial buildings dropped 9.6 %.

Because property investment historically accounted for a large share of total investment, the continued decline is eroding one of China’s key growth drivers. The slowdown in property also undercuts household wealth and consumer confidence.

External Sector and Trade Pressure

Export and import data also show strain: in October, total trade value stood at 3,702.8 billion yuan, up just 0.1 % year-on-year. Exports fell 0.8 % to 2,171.6 billion yuan, while imports rose 1.4 % to 1,531.1 billion yuan. General-trade imports and exports rose only 2.3 % and accounted for 63.4 % of total trade. Trade with Belt & Road partner countries grew 5.9 %.

A recent agreement between Donald Trump and Xi Jinping trimmed tariffs and paused further trade escalations for one year. But with global demand weakening and export-driven front-loading now fading, exports may no longer compensate for faltering domestic demand.

Outlook and Policy Considerations

Despite the softness, China is still firming up to meet its full-year growth target of “around 5 %”. In the first nine months the economy grew about 5.2 %. But the weakness in investment and property raises risks for 2026 and beyond.

Policymakers are expected to continue channeling investment into infrastructure, advanced manufacturing and industrial upgrading—areas such as new-energy vehicles, robotics and high-tech manufacturing grew by 30.8 %, 19.3 % and 17.9 % respectively in October.

However, many economists believe broad stimulus will be delayed until early next year. This cautious approach reflects concern about mounting local-government debt, excess industrial capacity and the diminishing returns of large-scale investment programmes.

Until confidence recovers among households and private investors, growth may remain patchy and structurally under-pressured.