China’s Oct data shows soft economic underbelly, backs calls for more stimulus

By Kevin Yao and Ethan Wang

BEIJING (Reuters) -China’s factory output growth slowed in October and demand woes in the property sector showed few signs of abating even though consumers seemed to perk up a bit more, backing calls for more stimulus to get the economy firing on all cylinders.

The burst of data is likely to maintain pressure on Chinese policymakers as they brace for the return to the White House of Donald Trump, who has vowed to hike tariffs on Chinese goods and named China hawks to his cabinet in a troubling sign for the world’s second-biggest economy.

October industrial output grew 5.3% from a year earlier, National Bureau of Statistics (NBS) data showed on Friday, slowing from September’s pace of 5.4% and missing expectations for a 5.6% increase in a Reuters poll.

However, retail sales, a gauge of consumption, rose 4.8% in October, accelerating from the 3.2% pace in September and marking the quickest growth since February.

Retail growth was boosted by a week-long holiday, and the annual Singles’ Day shopping festival, which kicked off on Oct. 14, ten days earlier than last year.

Data provider Syntun estimated that sales across major e-commerce platforms rose 26.6% to 1.44 trillion yuan over the Singles Day event.

“The stimulus impact should already be reflected in consumption, because the trade-in programme has been in place for a few months, it started earlier this year,” said Dan Wang, a Shanghai-based independent economist.

This meant “the trade-in programme, the consumption stimulus worked, but all the other more recent stimulus initiatives haven’t shown any impact, including earlier stimulus focused on housing,” she said.

Fixed asset investment rose 3.4% in the first ten months of 2024 from the same period a year earlier, versus expectations for a 3.5% rise. It grew 3.4% in the January to September period.

In contrast, property investment fell 10.3% year-on-year in January-October, deepening from a decline of 10.1% over the first nine months of the year.

Sales narrowed the slump, however, possibly indicating policy stimulus is starting to inject some life into the crisis-hit sector, even if a robust recovery might take some time.

Property sales by floor area in the January-October period fell 15.8% from a year earlier, slower than a drop of 17.1% over January to September.

In September, China’s central bank unveiled its biggest stimulus since the pandemic.

In its latest measures, the country’s top legislative body approved a 10 trillion yuan ($1.4 trillion) package last week to ease local government “hidden debt” burdens, rather than directly injecting money into the economy as some investors had hoped.

On Wednesday, authorities also announced tax incentives on home and land transactions to support the crisis-hit property market.

Analysts say the barrage of measures will only have a modest positive effect on economic activity, demand and prices in the near term.

China’s consumer prices rose at the slowest pace in four months in October, separate data released on Saturday showed, while producer price deflation deepened, despite the extra policy support.

Beijing has set a roughly 5% gross domestic product growth target for the year, though a Reuters poll last month forecast the pace to slightly undershoot the goal and slow further to 4.5% in 2025.

Trump’s election win last week has also caused unease in China as the President-elect has threatened to impose tariffs of 60% or more on Chinese goods imports, which could potentially usher in a prolonged period of economic uncertainty and further delay a long-awaited revival.