October sees economic upswing with consolidation required for foundation

Driven by holiday demand, there is a significant rebound in consumer spending.

Photo by Fan Jianlei

Photo by Fan Jianlei

By XIN Yuan


China’s economy maintained its upward trajectory in October, with a notable resurgence in consumer spending driven by holiday demand, the National Bureau of Statistics of China (NBS) revealed on Wednesday.

The national economy showed a sustained improvement in October, with key indicators steadily improving and economic operations remaining stable. However, external uncertainties persist, and domestic demand still appears insufficient, necessitating action to ensure economic recovery.

Significant rebound in consumer spending

Leveraging the surge in demand during the holiday season, October witnessed the highest year-on-year growth in retail sales of consumer goods since June.

Analysts attribute the improvement to the lower base in the same period last year, and anticipate a noticeable increase in growth in November and December.

The actual level of consumer spending remains relatively weak, falling short of normal levels, even below half.

On the policy front, analysts don’t expect any large fiscal stimulus this year. Instead, regions may implement their own policies, including subsidies and distribution of vouchers.

Mild improvement in industrial production

Similarly benefiting from a lower base in the same period last year, growth in industrial added value reached its highest since May.

Due to weakening external demand and a problematic real estate market, actual momentum of industrial production weakened slightly.

Considering the low base in the last two months of last year, the year-on-year growth in industrial production in the next two months is expected to continue to rise.

Continued downturn in real estate investment

In the first nine months, real estate development investment fell 9.3 percent.

The real estate market has not improved and risks for large enterprises have resurfaced, dragging on recovery.

Slowing infrastructure investment

Infrastructure investment grew by 5.9 percent year-on-year.

With 1 trillion yuan (US$140 billion) of government money injected into the market through bond issues, there is potential for an increase in infrastructure investment in the remaining two months of the year.

This could offset the decline in real estate investment and drive growth at the end of this year and the beginning of next.

Resilient manufacturing investment

Manufacturing investment grew 6.2 percent from January to October, with investment motivation primarily focused on competing for existing market share.

Overall manufacturing investment growth may remain moderate.