FAI continued to ease across sectors, while consumption remained solid in October. IP growth moderated, along with weak investment and exports. Overcapacity management and insufficient funding may have constrained investment, Standard Chartered’s economists report.
Growth momentum continued to weaken into Q4
“October activity data pointed to weakening momentum in investment, industrial production (IP) and exports, while retail sales held up well. Investment further decelerated across key sectors, with the contraction in housing FAI further widening to 23.1% y/y, the worst reading in two decades. Consumption remained solid, likely supported by the equity market rally and fiscal subsidy, but the effectiveness of the goods trade-in programme has been fading.”
“Infrastructure FAI has also plunged in recent months. While bad weather conditions may have weighed on construction in the summer, we believe the extended weakness is largely due to insufficient funding for infrastructure spending at the local government level. The government has planned CNY 2.8tn for the local government implicit debt swap programme this year, and more fiscal funding may have been allocated to this programme. In addition, overcapacity management and the noise around US tariffs in October may have delayed investment plans, especially in the manufacturing sector.”
“We maintain our 2025 growth forecast at 4.9% and our Q4 growth forecast at 4.4% y/y. The latest US-China trade deal lowered the tariff on China by 10%, which could provide some support to exports, especially in the holiday season. With tariff uncertainty easing and the government’s push for industrial upgrading and innovation, manufacturing FAI may stabilise in 2026. We believe the government will calibrate overcapacity management measures and fully implement the budget this year to support investment.”
Source: https://www.fxstreet.com/news/china-investment-decelerated-in-october-standard-chartered-202511140936
