China Delivery containers are seen on the port of Oakland as commerce tensions proceed over U.S. tariffs with China, in Oakland, California, on Might 12, 2025.
Carlos Barria | Reuters
BEIJING — China’s economic system grew 4.8% within the third quarter from a yr earlier, the slowest tempo in a yr however in step with analyst expectations regardless of the continuing actual property droop.
Fastened-asset funding, which incorporates actual property, unexpectedly contracted 0.5% within the first 9 months of the yr as spending on infrastructure and manufacturing slowed. Analysts polled by Reuters had forecast a 0.1% development.
Property funding prolonged its decline, sliding 13.9% within the yr via September, in contrast with a 12.9% drop throughout the first eight months of the yr.
The drop in fixed-asset funding is “uncommon and alarming,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Administration, mentioned in a observe. He warned that fourth-quarter GDP development faces downward strain.
The final time China recorded a contraction in fixed-asset funding was in 2020 throughout the pandemic, in accordance with information going again to 1992 from Wind Data.
“Weak spot in actual property funding could persist for an extended interval than beforehand anticipated,” Bruce Pang, adjunct affiliate professor at CUHK Enterprise College, mentioned in Chinese language, translated by CNBC.
“This might signify a structural restructuring, and it is potential that funding won’t ever return to its prior ranges,” he mentioned. “On this context, China wants to contemplate leverage funding from different sectors to fill the funding hole.”
Industrial manufacturing climbed 6.5% in September, topping expectations for a 5% enhance and up from 5.2% development within the earlier month.
Excluding property, fixed-asset funding for the primary three quarters of the yr rose by 3%, down from 4.2% as of August, in accordance with official information. Non-public sector funding outdoors actual property rose 2.1% for the yr via September, additionally slower than the three% recorded as of August.
“The weak spot in funding spending, particularly by the non-public sector, displays a insecurity within the economic system’s development prospects in addition to in authorities insurance policies that might assist development,” Eswar Prasad, a professor of economics at Cornell College, mentioned in an electronic mail.
Modest shopper spending
Retail gross sales rose 3% in September from a yr in the past, matching analyst forecasts. In an indication of waning assist from China’s shopper items subsidy program, gross sales of dwelling home equipment rose by a modest 3.3% in September, in contrast with a surge of 25.3% for the primary three quarters of the yr.
“I do not assume we may stimulate home demand with out stabilizing the housing market first,” Dan Wang, Eurasia Group, mentioned Monday forward of the info launch on CNBC’s “Squawk Field Asia.”
China’s Statistics Bureau mentioned disposable revenue for metropolis residents rose 4.5% within the first three quarters of the yr after adjusting for value modifications, whereas rural residents noticed a 6% enhance.
The city unemployment price ticked down to five.2% in September from 5.3% the earlier month.
Nevertheless, retail gross sales slowed from 3.4% year-on-year development in August, whereas third-quarter GDP slowed from 5.2% development within the earlier quarter.
Official information for September additionally confirmed continued resilience in China’s exports regardless of tensions with the U.S.
The core shopper value index, which strips out meals and vitality, rose at its quickest tempo since February 2024. However headline inflation fell 0.3%, lacking expectations as deflationary pressures persevered.
Earlier Monday, China saved its benchmark lending charges unchanged for a sixth-straight month, in step with expectations, with the one-year mortgage prime price at 3% and the five-year price at 3.5%.
China’s prime leaders are assembly from Monday to Thursday to debate coverage and improvement targets for the subsequent 5 years.
Beijing has sought to shift the economic system towards home consumption for development, whereas creating homegrown expertise within the face of rising U.S. restrictions.
“China ought to step up its efforts in tech, however we additionally firmly imagine the so-called outdated economic system will stay the spine of the economic system for the foreseeable future,” Nomura Chief China Economist Ting Lu mentioned in a observe final week. “Beijing must clear up the property sector mess in 2026-30 for a number of causes.”
He famous that actual property stays second solely to exports in contributing to China’s GDP, whereas about half of family wealth is in property, and that the sector nonetheless accounts for about 18% of native authorities income. Overinvestment in new industries reminiscent of electrical autos “has already turn out to be counterproductive,” Lu mentioned.
