China’s Economy Weakens: Factory Output & Retail Sales Hit Year-Low in October

China’s economic momentum slowed sharply in October, with factory output and retail sales growing at their weakest pace in over a year, underlining rising pressure on policymakers as the country faces a U.S. trade war and sluggish domestic demand.

Industrial production rose 4.9% year-on-year, down from 6.5% in September and below expectations.
Retail sales grew 2.9%, also the slowest pace since August 2024.

Economists say China is being squeezed on multiple fronts:

Key Pressures

• U.S. tariffs are hurting China’s export-heavy manufacturing sector.

• Domestic consumption remains weak, despite the Singles’ Day boost.

• Local government debt limits the scope for large-scale stimulus.

• Property sector slump continues to drag down overall growth.

Investment & Exports Falter

• Fixed asset investment fell 1.7% in Jan–Oct, worse than expected.

• Exports unexpectedly tumbled, as firms struggle to absorb U.S. tariff impacts.

• Auto sales broke an eight-month growth streak, showing weakening consumer confidence.

Policy Direction Unclear

Beijing acknowledges the need for structural reforms to:

• Boost household consumption

• Reduce dependence on exports

• Resolve deep debt imbalances

But policymakers remain cautious about big stimulus packages, especially since China only needs ~4.5% growth in Q4 to meet its 5% annual target.

Economists warn that without a new policy direction focused on households rather than state-led infrastructure, China’s slowdown may deepen into 2026.