The Trivium China Weekly Recap | Surprising Resilience

Is China’s economy fully stalling out?

• Looking at the most recent monthly economic data for October — released on Friday — one certainly might think so.

The data print was bad, pretty much across the board, with October seeing:

• Industrial value-added (IVA) growth of just 4.9% y/y, down from 6.5% the previous month — and private sector IVA growth of just 2.1%

• Fixed asset investment (FAI) down a stonking 12.2% y/y, accelerating from September’s 7.1% decline — and marking the fifth consecutive month of shrinking FAI

• Growth in retail sales of consumer goods a meager 2.9% y/y — the fifth consecutive month of slowing growth

Even exports — the primary engine of China’s economic growth throughout 2025 — fell 1.1% y/y in October, compared to 8.3% growth in September.

But despite all the gloom in the headline numbers, if you look under the hood a bit, there are areas of resiliency, especially among consumers — making us downbeat on the economic trajectory over the next six months, but not downright depressed.

Those silver linings include the facts that:

• The October deceleration in growth of consumer goods sales was driven by a surprise 6.6% y/y fall in auto sales. Excluding auto sales, retail sales of consumer goods grew 4.0%, the strongest growth rate in three months.

• Meanwhile, growth in retail sales of services surged 6.1% y/y last month, the fastest rate of growth we’ve seen all year.

• This comes as, year-to-date, households have directed 46.6% of their expenditure toward services — the highest rate on record.

• Meanwhile, consumer confidence surveys published in recent weeks by the central bank (PBoC) and stats bureau (NBS) show sentiment improving after years of gloom.

• The PBoC income confidence index ticked up in Q3 to its highest score in six quarters.

• And the NBS consumer confidence index edged up in September to its highest score in almost 3 years.

This budding confidence boost among households, combined with the accelerating shift toward the purchase of services — as opposed to goods — is an underappreciated aspect of the China consumption story.

• It suggests that households — and household spending — may be fundamentally more resilient than conventional wisdom suggests.

I touched on all this — along with a deep dive into China’s plan for its export sector in the years ahead — on this week’s Trivium China podcast, with my colleague Dinny McMahon.

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