Retail spending and industrial activity in China slowed in the latest monthly figures, underscoring the challenges authorities face in trying to revive confidence in the world’s second-largest economy.

Despite the end of Covid restrictions, domestic consumption has remained weak, weighed down by a prolonged property-sector debt crisis that continues to hurt household sentiment. Economists have long argued that China must rebalance toward consumer-led growth, moving away from decades of reliance on exports and large-scale investment.

Officials are targeting five percent GDP growth in 2025 — a goal analysts say is still attainable, though momentum appears to be fading in the second half of the year. “External instability and uncertainty factors remain numerous… and the economy faces many challenges,” National Bureau of Statistics (NBS) chief economist Fu Linghui said Friday.

NBS data showed retail sales expanded 2.9 percent year-on-year last month, slightly below September’s three percent rise and marking the fifth consecutive month of decelerating growth since May’s 6.4 percent peak.

The slowdown comes as Beijing and Washington move to ease trade tensions, with Presidents Donald Trump and Xi Jinping agreeing to a one-year truce during an October 30 meeting in South Korea. Although China’s exports have held up overall — with declines to the US offset by gains in Southeast Asia — domestic demand has proven far more difficult to revive.

At an economic planning meeting last month, Communist Party leaders stressed the need to “vigorously boost consumption.” Moody’s Ratings warned this week that domestic demand could remain slow to bounce back, saying priorities now include strengthening income distribution and social safety nets as well as innovation in strategic technologies.

Industrial output disappoints

Industrial production rose 4.9 percent year-on-year in October, missing Bloomberg’s forecast of 5.5 percent and marking the slowest pace since August last year. Capital Economics analyst Zichun Huang said weaker external demand, reflected in falling export sales, had dragged down factory activity.

“We expect the economy to remain weak over the coming quarter,” she noted, adding that the trade truce with Washington is unlikely to deliver significant relief.

Meanwhile, the property sector — at the center of China’s debt turmoil since 2020 — continues to decline. New home prices fell in 61 of the 70 major cities tracked by the NBS.

Fixed-asset investment also contracted 1.7 percent in the January–October period, deepening the 0.5 percent drop recorded in September. The weakness reflects subdued real estate investment and sluggish infrastructure spending, according to Pinpoint Asset Management president Zhiwei Zhang.

Zhang added that because China still appears “on track” to reach its five percent annual growth target, major new stimulus measures before year-end are unlikely.