China’s economic slowdown deepens in October as housing slump worsens and investments shrink more than expected
CHENGDU, CHINA – OCTOBER 18: People pass by the Louis Vuitton store in Taikoo Li, a high-end shopping district combining traditional Sichuan-style architecture with modern luxury retail, on October 18, 2025 in Chengdu, China.
Cheng Xin | Getty Images News | Getty Images
The slowdown in China worsened in October, driven by weak consumer demand and a deepening real estate crisis, and the long holiday period further impacted factory activity.
Fixed asset investment, which includes real estate, contracted by 1.7% in the first ten months of the year, following a 0.5% decline in the January-September period, according to Friday data from the National Bureau of Statistics. Analysts polled by Reuters had predicted a decline of 0.8%.
China last recorded a contraction in fixed asset investment during the pandemic in 2020, according to data dating back to 1992 from Wind Information, a private database focused on the country.
Industrial production increased by 4.9% in October, slowing down from the 6.5% increase in the previous month, and remained below expectations for a 5.5% increase.
China’s manufacturing activity contracted more than expected in October, falling to a six-month low as a week-long holiday from October 1 to October 8 closed most factories across the country.
Retail sales rose 2.9% in October from a year earlier, beating expectations for 2.8% growth in a Reuters poll, but down from a 3% annual increase in September.
The survey-based urban unemployment rate fell to 5.1% last month, from 5.2% in September.
According to Zhiwei Zhang, president and chief economist of Pinpoint Asset Management, the sharp decline in fixed asset investment was largely due to lackluster investment in the real estate sector and infrastructure.
According to LSEG data, consumer prices increased by 0.2% in October compared to the same period a year ago, recording the strongest inflation reading since January this year and the first positive growth since June.
Core CPI, which excludes food and energy, increased by 1.2% compared to the previous yearIt’s the highest level since February 2024, according to data provider Wind Information.
China’s exports in October unexpectedly contracted for the first time in almost two years amid a deepening slump in shipments to the United States due to rising tensions with Washington over trade before a deal is reached at the end of the month.
US President Donald Trump and Chinese leader Xi Jinping agreed last month in a tit-for-tat agreement to reduce tariffs and suspend a series of restrictive measures for a year.
However, Zhang expects Chinese policymakers to refrain from announcing additional stimulus measures for the rest of this year as the economy remains on track to meet its 5% growth target.
China’s economic growth slowed to 4.8% in the third quarter, following growth of 5.2% in the second quarter and 5.4% in the first quarter.
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