China's economy falters in October

China’s economy lost momentum in October, official data showed on Tuesday, hit by both Covid restrictions and weaker demand.

According to the National Bureau of Statistics, industrial production rose 5.0% year-on-year, down from September’s growth of 6.3% and below forecasts of 5.3%.

Retail sales, meanwhile, fell 0.5%, a sharp contraction on September’s growth of 2.5% and below expectations for a 1% rise. It was the first decline since May, when Shanghai was under lockdown.

Beijing has continued to pursue a policy of zero-Covid, which has seen stringent rolling lockdowns across the country. An NBS spokesman acknowledged that containment measures were putting "huge" pressure on the economy, Reuters reported.

Speaking at a press conference in Beijing, he added: "The impact from the triple pressures on economic operations - shrinking demand, supply shocks and weakening expectations - is growing."

Government measures to curb excessive borrowing in the country’s red-hot property sector - once one of the main drivers of China’s economic growth - have also weighed heavily this year, while overseas demand has started soften as the global economic outlook darkens. The NBS said property investment slumped 16% in October, following a 12.1% fall in September. It was the biggest drop since the start of 2020

Pantheon Macroeconomics said: "China has been a two-speed economy for much of this year, with domestic demand suppressed by zero-Covid policy and the property sector malaise, while output was cushioned by export demand and stimulus via infrastructure and manufacturing fixed asset investment.

"October saw a broad slowdown, as even the previous growth drivers weakened: exports fell 05% year-on-year, the first decline since May 2020, as global demand ebbed."

Fixed asset investment increased by 5.8% in the year-to-date in October year-on-year, narrowly missing consensus for a 5.9% rise.