China's economic slowdown raises hopes for new stimulus packages

China’s weak growth reflects growing pains in real estate, exports and domestic consumption, and observers say Beijing may soon face a difficult decision on whether to continue to “keep the fire” of recovery or accept deeper reforms to rebalance the economy.

View of a cargo port in Qingdao, Shandong province, China. Photo: THX/TTXVN

China's economy grew at its slowest pace in a year in the third quarter, as analysts had forecast, Reuters reported on October 20. The prolonged slump in the real estate sector and trade tensions with the United States continued to weaken domestic and international demand, posing a major challenge for Beijing in maintaining the recovery momentum.

According to data released by the National Bureau of Statistics of China on October 20, China's gross domestic product (GDP) in the July-September period increased by 4.8% compared to the same period last year but still decreased by 5.2% compared to the second quarter.

When comparing two consecutive quarters, China's economy in the third quarter increased by 1.1% - higher than forecast (0.8%) and slightly higher than the previous quarter's 1%.

Chinese authorities have introduced a series of moderate economic support measures this year, as exports and the stock market have shown some resilience. However, the resurgence of US-China trade tensions has cast a shadow over growth prospects. Meanwhile, Beijing still faces the long-term problem of shifting its growth model from relying on export investment to promoting domestic consumption.

Observers say China still has room to loosen policy, but experts are divided on whether Beijing will act this year.

Fresh trade tensions with the US have exposed the weaknesses of its manufacturing- and export-oriented economy, leading many experts to say China will be forced to accept tougher reforms to rebalance growth.

Although China's exports rebounded in September, other indicators suggest the recovery is slowing, while deflationary pressures persist due to excess capacity and fierce competition among businesses.

Many Chinese exporters have now started looking for new markets, facing higher tariffs from the US - applied since the beginning of the year. US President Donald Trump recently threatened to double tariffs on Chinese goods from November 1, although officials from both sides have signaled that they want to cool tensions.

China's leadership will hold a four-day closed-door meeting in late October to discuss a range of issues, including the 15th five-year economic and social development plan. This is expected to prioritize high-tech industries amid intensifying competition with the United States.

Investors are also keeping an eye on the Politburo and Central Economic Work Committee meeting, scheduled for December, to seek economic policy direction for next year.

Also on October 20, China announced September activity figures, showing that industrial production increased 6.5% year-on-year, higher than August's 5.2% and far exceeding forecasts (5%). However, retail sales increased only 3%, down slightly from the previous month's 3.4%, reflecting cautious consumer sentiment amid economic uncertainty.

Source: https://baotintuc.vn/the-gioi/kinh-te-trung-quoc-giam-toc-lam-day-len-ky-vong-ve-cac-goi-kich-thich-moi-20251020140159771.htm