Is China’s Economy Slowing or Quietly Stabilizing? A Look at October 2025

China’s economy in October 2025 showed mixed signals, with headline indicators pointing to weakness. Industrial output, retail sales, and investment slowed sharply, while exports declined for the first time in months. Yet improving consumer confidence and stronger service spending suggests underlying resilience despite structural challenges.

China’s latest economic data for October paints a picture of recovery that is increasingly fragile and uneven. Headline indicators were weak across the board: industrial value-added growth slowed sharply to 4.9 percent year-on-year from 6.5 percent in September, fixed asset investment plunged 12.2 percent, marking its fifth consecutive monthly decline, and retail sales growth eased to 2.9 percent, its lowest in months.

Even exports, the economy’s main growth engine in 2025, fell 1.1 percent, reversing September’s strong performance. Yet beneath these disappointing numbers, pockets of resilience remain, particularly in services consumption and improving household confidence, suggesting that while near-term momentum is soft, the foundations of demand may be sturdier than they appear.

According to NBS spokesperson Fu Linghui, the slowdown reflects tighter profit margins, rising competitive pressures, and a more measured approach to capital spending among private firms. The prolonged downturn in real estate continues to exert significant influence as well, reducing overall investment growth by an estimated three percentage points.

Fu acknowledged that the external backdrop remains challenging, with global demand softening and geopolitical tensions adding uncertainty. Despite this, authorities maintain that the economy is still broadly on track to meet its full-year growth target,an assessment that suggests policymakers are likely to continue favoring targeted and incremental support rather than large-scale stimulus.

As China enters the final months of 2025, the key question is whether existing policy tools will be enough to stabilize expectations and counter ongoing structural drags. While exports and high-tech manufacturing provide important points of resilience, sustained improvement will depend on whether confidence, consumption, and private investment can gain firmer traction.

October 2025 key economic indicators and performance

Industrial activity softens, but high-tech and equipment manufacturing outperform

China’s industrial sector expanded in October, though at a slower pace than earlier in the year. Industrial value-added output rose 4.9 percent year-on-year, with modest contributions from mining (+4.5 percent) and manufacturing (+4.9 percent).

Growth in equipment manufacturing (+8.0 percent) and high-tech manufacturing (+7.2 percent) outpaced the broader industrial sector, reflecting continued investment in technology upgrade and advanced production lines. Output of several emerging products also remained strong, including:

• 3D printing devices (+30.8 percent);
• New energy vehicles (+19.3 percent); and
• Industrial robots (+17.9 percent).

State-owned enterprises posted faster industrial output growth than private firms, underscoring ongoing divergence in business conditions. Meanwhile, the manufacturing PMI remained in contraction at 49.0, though the expectations index of 52.8 indicated cautious optimism among firms.

Services sector maintains stable expansion with strong performance in modern services

The services sector continued to grow in October. The Index of Services Production increased 4.6 percent year-on-year, driven by robust gains in modern, knowledge-intensive segments:

• Information transmission, software, and IT services (+13.0 percent);
• Leasing and business services (+8.2 percent); and
• Finance (+5.6 percent).

Activity levels in transportation, accommodation, cultural, and entertainment services remained high, with several sub-sectors reporting readings above 60 in the services activity index, indicating solid demand for travel and leisure.

Over January–October, the services production index rose 5.7 percent, supported by 7.6 percent revenue growth among large service enterprises.

Consumer demand softens, but upgraded consumption categories show resilience

China’s consumer market cooled further in October, with retail sales rising only 2.9 percent year-on-year. Urban retail sales grew 2.7 percent, while rural consumption expanded more quickly at 4.1 percent. Nevertheless, the October deceleration was largely driven by a surprise 6.6 percent year-on-year fall in auto sales. Excluding autos, retail sales of consumer goods increased 4.0 percent, marking the strongest growth rate in three months..

Service-related consumption remained relatively firm, with catering revenue up 3.8 percent. Certain upgrade-oriented categories continued to outperform, including:

• Communication equipment (+23.2 percent);
• Cultural and office supplies (+13.5 percent);
• Sports and recreational goods (+10.1 percent); and
• Grain, oil, and food (+9.1 percent).

Online retail sales maintained steady momentum, rising 9.6 percent in the first 10 months of the year, and accounting for over 25 percent of total retail sales.

Fixed asset investment contracts, dragged down by real estate

Investment data remained the weakest component of the October release. Fixed asset investment fell 1.7 percent year-on-year over January–October, weighed down heavily by a 14.7 percent decline in real-estate development investment. Private investment dropped 4.5 percent, reflecting still-cautious sentiment among domestic firms.

However, excluding real estate, FAI grew 1.7 percent, with pockets of strength in the industrial upgrade agenda. Key performers included:

• Information services investment (+32.7 percent);
• Aerospace equipment manufacturing (+19.7 percent); and
• Computer and office device manufacturing (+4.1 percent).

Manufacturing investment rose 2.7 percent, while infrastructure investment edged down 0.1 percent. Investment in the tertiary sector declined 5.3 percent, underscoring the broader slowdown in services-related construction and real estate-linked industries.

Export declines, imports posts a mild recovery

In October, the total value of goods trade reached RMB 3.7 trillion (US$520.63 billion). Exports dipped slightly by 0.8 percent (in dollar terms, -1.1 percent), as compared to 8.3 percent gorwth in September. Imports posted a mild growth of 1.4 percent (in dollar terms, +1.0 percent), down from 7.4 percent growth in the previous month.

Over the first 10 months of 2025, total imports and exports expanded 3.6 percent (in dollar terms, +2.7 percent), driven by:

• Stronger trade with Belt and Road partner economies (+5.9 percent);
• Robust performance of private enterprises (+7.2 percent), which now account for 57 percent of total trade; and
• Continued growth in mechanical and electrical exports (+8.7 percent), making up over 60 percent of China’s total export value.

The overall trade structure continues to shift toward higher-value goods and more diversified markets.

Consumer inflation turns positive; producer-price declines narrow

Price indicators showed tentative signs of stabilization. The consumer price index (CPI) rose 0.2 percent year-on-year in October, reversing a 0.3 percent decline in September. Core CPI strengthened to 1.2 percent, reflecting firmer demand in non-food categories.

Food prices continued to fall (–1.6 percent), with declines in pork, vegetables, and fruit. Transportation and communication prices dropped 1.5 percent amid lower fuel and telecom costs.

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Producer prices remained in negative territory but showed improvement. The PPI declined 2.1 percent year-on-year, a narrower drop than in September, while month-on-month prices ticked up 0.1 percent – suggesting early signs that industrial deflation may be bottoming out.

How to interpret China’s October 2025 data

China’s October 2025 indicators present a more complex picture than the headline figures suggest. On the surface, the data points to a clear loss of momentum: industrial output slowed, investment contracted sharply, and export growth softened following months of strong performance. Retail sales also decelerated for the fifth consecutive month, reinforcing concerns over the durability of domestic demand.

Yet a closer reading reveals a more nuanced dynamic. Several traditionally overlooked segments of the economy continued to show resilience. The moderation in retail sales, for instance, was heavily influenced by a steep drop in auto purchases. Excluding automobiles, consumer goods sales actually accelerated, and service-related spending recorded its strongest expansion of the year. Households are allocating a larger share of expenditure to travel, leisure, and other services, suggesting that China’s consumption story may be gradually shifting rather than simply weakening.

US$520.63 billion from the PBoC and NBS also indicate early signs of stabilizing sentiment, with both income expectations and consumer confidence rising to multi-year highs. While these improvements remain modest, they challenge the prevailing narrative that households have become structurally pessimistic.

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At the macro level, the most important indicator may be the policy stance. Despite the soft October print, China has refrained from deploying large-scale stimulus, and monetary authorities have maintained an unusually restrained posture. This suggests that top policymakers do not view the current slowdown as severe enough to warrant aggressive intervention. In practice, this implies two things: first, that authorities believe annual growth is still broadly on track; and second, that they remain committed to their longer-term priorities of industrial upgrading, restructuring, and reducing reliance on debt-driven expansion.

Taken together, the October data highlights an economy that is not accelerating, but not unraveling either. Growth will likely remain moderate and somewhat uneven through the coming quarters, constrained by the ongoing property adjustment and weak private investment. Yet the underlying structure appears more resilient than headline numbers imply, supported by a steady export base, a recovering services sector, and improving household sentiment.

For foreign firms and investors, the takeaway is clear: China’s short-term trajectory is defined by slower but more stable growth, while its medium-term outlook is shaped increasingly by the shift toward innovation-driven development. Understanding this duality (cyclical pressures versus structural recalibration) is essential for interpreting China’s economic signals as 2025 draws to amid close.

What’s holding up

Despite the overall cooling trend, several parts of the economy continue to provide stability. Manufacturing linked to advanced equipment and high-tech industries is growing faster than the broader industrial sector, supported by steady global appetite for electronics, machinery, and vehicles. These areas benefit from long-running industrial upgrading policies and targeted fiscal incentives, which have kept investment and output comparatively strong.

The external sector is also underpinning growth. Firms have redirected orders toward markets less exposed to US tariffs, while exports of mechanical and electrical goods remain robust. This ability to reallocate trade flows and move up the value chain has helped China lessen the impact of weaker demand from the United States and other advanced economies.

Meanwhile, policy support (though restrained) remains an important backstop. Officials have signaled that they are willing to adjust monetary and fiscal tools if needed, even if broad-based stimulus is unlikely. The combination of low inflation and easing producer-price deflation provides room for more targeted measures, and ongoing initiatives such as consumption incentives and support for small and medium-sized enterprises (SMEs) suggest that Beijing is prepared to act to prevent sharper deceleration.

Where the weakness lies

The October data nonetheless underscore the significant pressures weighing on China’s domestic economy. Household spending remains subdued, with weaker sales across several discretionary categories. Although incomes are rising gradually and confidence indicators are stabilizing, households remain selective, particularly given uncertainties in employment prospects and asset values.

The most persistent drag comes from the property sector, where investment continues to contract at double-digit rates. Falling home sales and soft prices are eroding household wealth and impairing local-government finances, complicating broader efforts to sustain investment and maintain stable growth. Until the property correction approaches a clearer bottom, real estate–related industries and local fiscal conditions will continue to act as a brake on recovery.

Finally, China’s growth structure leaves it exposed to external volatility. An economy still heavily reliant on exports and state-led investment is vulnerable when global conditions deteriorate or when trade tensions escalate. Weak private investment, held back by cautious sentiment and regulatory uncertainty, further limits the economy’s ability to rebalance toward consumption and innovation-led activity.

These weaknesses do not point to imminent instability, but they do highlight the constraints China faces as it attempts to shift toward a more sustainable growth model. For businesses and investors, they also underline the importance of preparing for an environment defined by slower domestic demand, a prolonged property adjustment, and sharper divergences between outperforming and lagging sectors.

Outlook: Can growth sustain?

China’s October 2025 data confirm that the economy is slowing, but not derailing. With GDP growth at 4.8 percent in the third quarter and most monthly indicators softening in October, many institutions now expect full-year 2025 growth to come in just under the official “around 5 percent” target, generally in the 4.8 to 5.0 percent range.

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Looking ahead to 2026, the balance of risks tilts to the downside. The October figures show deeply negative real-estate investment, weak private fixed asset investment, and a visible loss of momentum in exports and industrial output, all against a backdrop of elevated global uncertainty. Without stronger support for household demand and a clearer resolution of the property correction, many analysts expect growth to ease further toward the mid-4 percent range over the next year. In this context, policy choices will be decisive. To prevent a more pronounced slowdown and steer the economy toward a more sustainable footing, the government will need to:

• Strengthen household incomes and the social safety net to encourage consumption;
• Open additional segments of the services and producer-services sectors to private and foreign participation; and
• Continue reducing the economy’s heavy reliance on real estate and debt-fueled investment, while using targeted fiscal and credit measures to support small and medium-sized enterprises and weaker regional economies.

For foreign investors and managers, the environment will remain complex but not closed. Trade tensions, possible new tariff measures, supply-chain reconfiguration, and evolving regulatory requirements will continue to shape risk assessments. At the same time, China’s domestic market is still under-penetrated in many higher-value services and consumer niches. Translating that potential into profitable growth will require careful calibration to slower headline growth and more cautious local demand. Execution risk, rather than pure market-size risk, will be the main constraint.

Per sector, the pattern visible in the October data is likely to persist. High-tech manufacturing, advanced equipment, green industries, and selected infrastructure segments are set to remain relative outperformers, supported by industrial policy and export demand. By contrast, sectors closely tied to the property cycle, traditional heavy industry, and lower-end discretionary goods face a tougher outlook as investment is scaled back and households remain selective in their spending.

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