Type to search

China’s Economy Slows as Retail Sales, Factory Output Slip

China’s retail sales dropped in October, for the first time in five months, and factory output grew more slowly than expected, new data showed on Tuesday

China's retail sales fell in October, for the first time since May, new data shows.
Retail sales fell in October, official data shows. Workers sort out packages at a delivery company after Singles' Day, the world's biggest 24-hour retail event, in Yangzhou, Jiangsu province. File photo: AFP.


The latest economic data from China’s National Bureau of Statistics (NBS) on Tuesday suggests the world’s second-largest economy is losing momentum amid its Covid restrictions and property downturn.

China’s factory output grew more slowly than expected and retail sales dropped in October, for the first time in five months.

Property investment also fell at its fastest pace in 32 months, pointing to further weakness in a sector that accounts for a quarter of the economy.

China’s zero-Covid policy and property slump have been amplified by global recession risks.

Recent moves to ease some Covid restrictions and provide financial support to the property market have bolstered market sentiment, but analysts do not expect Beijing’s strict Covid policy to change until after the first quarter in 2023.

Tuesday’s figures were the latest to point to a weakening economy after other data showed exports contracting and new bank lending tumbling more than expected. Recent inflation data also showed faltering domestic demand.

“October activity growth broadly slowed and missed market expectations, pointing to a weak start to Q4 as a worsening Covid situation, prolonged property downturn and slower export growth more than offset continued policy stimulus,” analysts at Goldman Sachs said in a note.

Industrial output rose 5.0% in October from a year earlier, missing expectations for a 5.2% gain in a Reuters poll and slowing from the 6.3% growth seen in September.

Retail sales fell for the first time since May, when Shanghai was under a city-wide lockdown. Sales dropped 0.5%, against expectations for a 1.0% rise and compared with a 2.5% gain in September.


Biden-Xi Meet Warms the Bilateral Chill But Expectations Low



November Could be Worse

A week-long National Day holiday did little to boost consumption in October, traditionally a popular month for domestic travels.

Covid outbreaks widened across the country in October, disrupting pandemic-sensitive service businesses, such as the restaurant industry. China’s catering revenue slumped 8.1%, down sharply from a 1.7% drop in September, NBS data showed.

November is shaping up to be even worse, Zichun Huang, an economist at Capital Economics, said.

“With exports cooling, the property sector still in the doldrums and the zero-Covid policy likely to remain in place longer than many hope, the near-term outlook is gloomy.”


Property Investment Down 16%

Property investment fell 16.0% year-on-year in October – its biggest drop since January-February 2020, according to calculations based on NBS data. It slumped 12% in September.

Property sales measured by floor area dropped 23% year-year in October, falling for a 15th straight month, with buyers reluctant to take on more debt as the economy slows amid protracted Covid restrictions.

China’s property sector has slowed sharply as the government has sought to restrict excessive borrowing. A plan to shore up liquidity outlined by Chinese regulators on Sunday sent Chinese property stocks and bonds soaring on Monday.

China’s financial regulator said in a notice published on Monday it will allow property developers to access some pre-sale housing funds, in the latest move to relieve the liquidity crunch.

“It is clear that new policies to boost domestic demand are needed to refuel China’s fragile recovery. Sluggish consumption and faltering property investment remain dawdlers, due to still-weak expectations on household income and macro growth,” Bruce Pang, chief economist at Jones Lang Lasalle, said.

Fixed asset investment expanded 5.8% in the first 10 month of the year, versus expectations for a 5.9% rise and growth of 5.9% in January-September.

Hiring remained low among companies growing increasingly wary about their finances. The nationwide survey-based jobless rate stayed at 5.5% in October, unchanged from September. Youth unemployment stood at 17.9%, also the same level as September.

The country is on track to miss its annual growth target of around 5.5%, analysts say. Economists in a Reuters poll expect the economy to grow 3.2% in 2022.


  • Reuters with additional editing by Jim Pollard





Covid Cases Rise Further in China’s Guangzhou, Zhengzhou


Apple Warns Covid Curbs in China Have Hit iPhone Output


China’s New Home Prices Down Again Amid Weak Demand



Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


AF China Bond