FX.co ★ China Economy Softens Amid Pre-Truce Trade Uncertainty

China's national statistics agency acknowledged the persistent external uncertainties and increasing domestic structural challenges, yet emphasized that overall economic activity in October remained stable. This statement came after new data revealed industrial output growth had slowed to its lowest point in 14 months, a result of holiday-related disruptions coupled with challenges arising from U.S. trade tensions prior to the extension of the trade truce. Retail sales saw a year-over-year increase of 2.9%, which was the slowest in 14 months but slightly exceeded forecasts of 2.7%, thanks to consumer subsidy programs and holiday spending. The unemployment rate, as per employer surveys, fell to a four-month low of 5.1%. However, fixed-asset investment on the mainland dropped by 1.7% year-on-year in the first ten months of the year, marking the steepest decline since June 2020. Previous data indicated that new yuan loans decreased more than anticipated in October, highlighting weak credit demand from households and businesses. This presents an increasing challenge for policymakers aiming to stimulate an economy that is losing momentum.