China’s official statistics showed industrial output growing 4.9% year-on-year in October and retail sales expanded 2.9%, both the weakest pace since August 2024. Second-hand home prices in China’s four top-tier cities—Beijing, Shanghai, Guangzhou and Shenzhen—fell an average of 0.9% from the previous month, and prices across all 70 major cities were down for the second month in a row. And there is also news that Tesla has instructed its suppliers to avoid the use of China-made parts in its US cars.
Industrial output, consumer spending, the property market and decoupling are all key to understanding the real state of China’s economy, and these statistics and announcements tend to support our consistent messaging of cautious negativity on the matter. There is some hope for growth in the current cohort of sectors deemed national strategic priorities, and there has also been some growth in international investment into the country, but consistent positive trends that offset the above negatives have not been forthcoming.
Taken as a whole, alongside the anecdotal feel of interactions we have had in recent months in China, there does appear to be an issue. And there seems to be a growing disconnect between perceptions of China from the outside, and how it feels in the country.