China is bracing for its longest slowdown in consumption growth since the post-Covid rebound began to fade more than four years ago, revealing the gap between the government’s pledges to boost domestic demand and the reality of a cooling economy. According to data expected Friday, retail sales likely rose just 2.8% in October from a year earlier, based on a median forecast from economists surveyed by Bloomberg. That would mark the fifth consecutive month of deceleration—the longest such stretch since 2021—and the weakest increase in over a year.
Beijing’s top policymakers and Communist Party leaders have repeatedly vowed to lift household spending, with the party recently pledging to “significantly” raise the share of consumer expenditure in the economy over the next five years. Yet, the numbers tell a different story. The modest retail gain reflects both temporary factors, such as a higher comparison base and one fewer working day in October, and deeper structural issues that continue to weigh on consumer sentiment.
Bloomberg data also show that the slowdown in retail activity comes alongside a broader easing in industrial production, which is projected to grow 5.5%, down from 6.5% in the previous month. Fixed-asset investment is expected to contract by 0.8% in the first ten months of the year, deepening from 0.5% in the prior period, while property investment remains mired in double-digit declines. October’s export data added to the gloom, recording the first contraction in eight months and further dampening production momentum.
Citigroup economists led by Yu Xiangrong noted that “economic indicators seem set to slow down in October due to a higher base and the calendar effect as well as weaker momentum.” Despite these trends, authorities appear reluctant to unleash major stimulus, with the government’s full-year growth target of around 5% for 2025 still within reach. The consensus forecast among economists currently pegs gross domestic product growth at 4.9% for the year.
The weakness in consumption was already apparent during the National Day holiday earlier this month, when travel and spending data fell short of expectations. Analysts say the tepid figures underscore the limits of Beijing’s piecemeal approach—offering targeted subsidies for certain goods rather than broader measures to raise household incomes and purchasing power.
Elsewhere in the economy, capital spending in high-technology sectors has remained relatively resilient, but traditional infrastructure projects have lost momentum amid tighter controls on local government debt. The ongoing property downturn continues to erode confidence, weighing heavily on investment and household wealth.
Since late September, Beijing has unveiled a combined one trillion yuan ($141 billion) in new stimulus aimed at bolstering investment and strengthening local finances. However, analysts caution that the impact will take time to materialize. Monetary easing, too, may be delayed, after the People’s Bank of China signaled a less dovish stance this week, suggesting that further rate cuts are unlikely in the near term.
Still, there are some glimmers of optimism. The easing of trade tensions with the United States and surging global demand for artificial intelligence-related products have helped shore up China’s export outlook. Economists at Macquarie Group, including Larry Hu, described exports as “the biggest surprise” of the year and forecast a modest 1% growth next year. They argue that robust external demand could again offset weaker domestic consumption, prolonging what they describe as China’s “bifurcated” growth pattern—where strong exports mask soft spending at home.
For now, however, the data paints a sobering picture: despite the government’s confident rhetoric, Chinese consumers remain cautious, and the long-promised shift toward domestic-led growth still looks elusive.
