Beijing faces headwinds as global trade and domestic demand falter
HONG KONG — China's economy expanded by 4.8% year-on-year in the July–September quarter, marking its slowest annual growth in a year, as persistent trade tensions with the United States and subdued domestic demand dragged on momentum.
According to official data released Monday, the latest figures represent a slowdown from the 5.2% growth rate recorded in the previous quarter and are the weakest since the third quarter of 2024. For the first nine months of the year, the world's second largest economy grew 5.2% annually, in line with the government's full-year target of "around 5%."
Despite higher US tariffs imposed by President Donald Trump, Chinese exports have held up relatively well, with many firms redirecting sales to alternative global markets. Exports to the US, however, fell 27% in September, while overall exports rose 8.3%, the strongest gain in six months.
Exports of electric vehicles more than doubled compared with a year earlier, while domestic passenger car sales rose 11.2%, down from a 15% increase in August, according to recent industry data.
Political uncertainty and industrial challenges
Tensions between Beijing and Washington remain high, and it's still uncertain whether President Donald Trump and Chinese leader Xi Jinping will meet during a regional summit later this month.
Meanwhile, Xi and other top Communist Party officials began one of the country's most important annual political gatherings on Monday to outline economic and social policies for the next five years.
The recent slowdown reflects government efforts to curb price wars in overcapacity-hit sectors such as the auto industry. At the same time, a prolonged property downturn continues to dampen consumer confidence and spending.
Official data showed residential property sales fell 7.6% by value from a year earlier in the January–September period. While industrial output grew 6.5%, the fastest pace since June, retail sales slowed to 3%, pointing to weakening domestic demand.
Outlook clouded by property woes and policy uncertainty
Credit ratings agency S&P expects China's new home sales to drop 8% in 2025, followed by a further 6–7% decline in 2026, underscoring deep structural challenges in the property sector.
The World Bank forecasts China's economy will grow 4.8% this year slightly below Beijing's 5% target. Despite the weaker data, Chinese stocks rose Monday, with Hong Kong's Hang Seng Index up 2.3% and the Shanghai Composite Index advancing 0.5%, as investors bet on further policy support.
A spokesperson for the National Bureau of Statistics said the country still has a "solid foundation" to meet its annual growth goal but acknowledged that external frictions and protectionist policies in key trading partners were weighing on performance.
Economists see room for more stimulus
According to Lynn Song, chief economist for Greater China at ING Bank, stronger first-half growth provides China with "some buffer" to reach its yearly target. However, Golden Week spending in October was "mildly disappointing," reflecting fragile consumer confidence, analysts at Morningstar noted. Fixed-asset investment covering factories, equipment, and infrastructure slipped 0.5% in the last quarter, highlighting weak business sentiment. Falling prices at both the consumer and wholesale levels also indicate ongoing deflationary pressures.
"There's still room for additional policy support," Song said. "We're watching to see if new measures will be introduced to stimulate consumption and stabilize the property market as earlier efforts lose strength." Many analysts expect the People's Bank of China to cut interest rates before year end to bolster lending and investment.
However, Jacqueline Rong, chief China economist at BNP Paribas, warned that growth may slow further in 2026, as property investment continues to fall and the AI-driven market rally that boosted the economy this year begins to cool.
Post a Comment