Explained Interview | How China’s latest GDP data show economy’s resilience, alongside deeper concerns

What is the overall health of the Chinese economy at the moment?

The latest data point to an economy that’s steadying but not yet strong. The 4.8% year-on-year GDP growth shows that China is on track to hit its 5% full-year target, but the deceleration from the first half suggests momentum is softening.

What’s striking is the mix: industrial output is outperforming expectations, yet consumption and investment remain weak. In other words, the supply side looks resilient, but demand-side confidence hasn’t caught up yet. The latter is concerning.

Do the import-export data show any shifts? Can US tariffs be at least partially blamed for the reduced pace of growth?

The export data suggest that China’s trade dynamics are being reshaped in very systematic ways.

Exports to the United States are down sharply, but shipments to the Association of Southeast Asian Nations (ASEAN) and Belt and Road Initiative (BRI or China’s policy to build or fund infrastructure projects in Global South countries) markets have surged. It is further evidence that China has been cushioning the trade-tariff blow through diversification, which has been an ongoing trend.

That said, the trade rebound is fragile; some of the recent uptick reflects firms front-loading goods or shipping them out earlier in the year, ahead of anticipated tariff risks, and low base effects from last year. So, the takeaway is that China is adapting to the tariff environment and that shows its resilience, but trade isn’t the economic growth engine it once was.

Why have low domestic consumption and deflation been flagged as concerns in recent years, and where do they stand now?

A critical part, unsurprisingly, is related to the property market, which boomed in recent decades due to high urban-to-rural migration, and a model where real estate companies built aggressively. As demographics and demand shifted, the overleveraged companies gradually collapsed, impacting allied sectors and the markets.

Home prices keep sliding — a drag on the wealth effect, or the idea that consumers spend more when they believe their assets are highly valued. I think this will be a critical issue to address, and it’s no easy matter, involving recovery of household balance sheets and upgrading of infrastructure that spurs consumption (especially in the service sector, which remains the short board). In general, what’s needed is healthier corporate profits (which have been another major issue) so that firms start hiring and people’s income and employment feel more secure.

It also has to do with the long-term government strategy, where for decades, national income was used to further investment, such as on infrastructure, rather than household consumption, to achieve growth. But over time, capacity outpaced demand, as households didn’t see their incomes or confidence increase as substantially.

How alarming is the drop in fixed asset investment (including land, machinery, etc.) in the first nine months?

The drop in fixed-asset investment (now turning negative or reducing by 0.5% y-o-y in the first three quarters) is a real warning sign. It reflects not just the property slump but also a deeper loss of confidence among private firms.

Real estate remains the biggest drag, but even non-property investment is cautious. Beijing’s latest 500-billion-yuan fiscal injection will help offset some of the decline, mainly through infrastructure projects, but that’s a stopgap.

Some of the slowdown in investment is structural, partly by design. Policymakers are trying to rein in unproductive capacity and steer capital toward higher-value sectors, but the transition is uneven. And the fact that, despite the low price environment, demand is still not picking up makes the spiral self-reinforcing. How to manage this structural shift is the key challenge.

Another very real challenge is how to rebuild trust in the private sector and revive animal spirits. Both structural and policy-related factors are behind the current trust deficit. The private sector’s confidence hasn’t just fallen because growth naturally slowed after decades (true for some sectors, like property, but doesn’t explain others, such as the retail areas); it’s also about predictability, and the general outlook on the macro economy.

Over the past few years, entrepreneurs and investors have seen shifting policy signals, especially in areas like technology, private education, and property. Even if the intent was to reduce systemic risk (like by regulating real estate giants) or promote equity under the banner of common prosperity, it created uncertainty and a massive chill among the entrepreneurial community.

The private sector is still in a wait-and-see mode, for clearer signals that policy will remain stable, consistent, and genuinely supportive of private enterprise, not just rhetorically but in day-to-day implementation, and also waiting for a broad-based economic recovery. Without their trust, investment-led growth will just lose steam.

The numbers come amid an ongoing official policy meeting in China, and before the meeting between Presidents Xi Jinping and Donald Trump in late October. Could the numbers influence those events?

The timing is significant. They will not change anything per se, as the contours of the Fourth Plenum meeting to discuss China’s next Five-Year Plan for 2026 to 2030 have been in the works long before the data drop. But the data further accentuate the critical challenge at hand: managing slower growth while pushing through structural upgrades.

I think the current data are both a validation of the resilience of China’s economy and an alarming call on the depth of the problems in consumption and the private sector. The weak domestic demand figures, in particular, may still push for stronger, more accelerated pro-consumption measures in the months to come, but again, it will take time, and no major stimulus is expected.

As for the Xi-Trump meeting, the data underscore a mutual reality: both economies are feeling the strain of prolonged tension. That could create a narrow window for pragmatic restraint — definitely not a thaw, but a pause in the dangerous escalatory dynamics we saw from the latest episode over rare earths. Beijing has little incentive to let the bilateral relationship spiral out of control, especially when it needs stability to shore up domestic growth.