China’s Factory Output and Retail Sales Hit Lowest Growth in Over a Year
BEIJING, Nov 14, 2025 — China’s industrial production and retail sales posted their slowest growth in more than a year in October, adding new pressure on policymakers to stabilize the world’s second-largest economy as both supply and demand strains intensify.
For decades, Beijing has relied on a predictable formula: stimulating its vast manufacturing sector to lift exports when domestic spending slowed, or turning to state-funded infrastructure to prop up GDP. But the ongoing tariff conflict with U.S. President Donald Trump is highlighting the limits of these strategies and China’s deep dependence on American consumer demand.
Fresh economic indicators released on Friday offered little sign of a quick recovery, and month-by-month deterioration suggests that deeper structural reforms are becoming unavoidable.
Weakest Industrial and Retail Growth in Over a Year
Industrial output rose 4.9% year-on-year in October, according to the National Bureau of Statistics — the weakest performance since August 2024 and far below the 6.5% growth recorded in September. It also missed the 5.5% increase forecast in a Reuters poll.
Retail sales grew just 2.9% — their slowest pace since last August — slipping from September’s 3.0% rise, though slightly above market expectations.
“China is facing pressure from all sides,” said Fred Neumann, chief Asia economist at HSBC. “Export-driven growth will be hard to sustain next year, and without stronger stimulus, slowing investment and consumption will be difficult to reverse.”
Structural Challenges Deepening
Beijing has acknowledged the need to rebalance the economy — boosting household spending, addressing long-standing supply-demand mismatches, and tackling the escalating burden of local government debt. But officials also recognize that implementing reforms will be politically risky at a time when the U.S. trade war continues to weigh on growth.
Last week’s trade data showed an unexpected drop in exports as manufacturers struggled to find profitable markets after months of front-loading shipments to avoid U.S. tariffs.
Automobile sales, expected to surge ahead of the expiry of tax incentives, instead fell for the first time in eight months. The decline is concerning because the fourth quarter is traditionally the strongest period for China’s auto market — and 2025 even included one extra national holiday compared with 2024.
Investment and Housing Continue to Decline
Fixed-asset investment dropped 1.7% in the January–October period from a year earlier, exceeding expectations of a 0.8% decline and worsening from a 0.5% fall in the first nine months.
The ongoing slump in the crucial property sector — a major source of household wealth — also persisted, with new home prices falling at their fastest pace in a year.
“Investment cannot be allowed to collapse,” warned Xu Tianchen, senior economist at the Economist Intelligence Unit. “Even as China shifts towards consumption-led growth, investment must remain strong.”
Beijing Eyes Growth Targets, May Revert to Old Playbook
China’s Communist Party outlined its five-year economic strategy last month, promising to significantly boost household consumption while strengthening its industrial base.
Analysts believe Beijing may again turn to its traditional approach of directing state resources toward large companies and infrastructure projects — a quick route to achieving its official growth target of around 5%.
“In 2026, substantial government support will still be required,” Xu said. “Structural challenges are dragging on growth, and next year’s base will be even higher.”
Reporting by Joe Cash; Additional reporting by Ellen Zhang. Editing by Shri Navaratnam.
