China May See Consumption Push As Growth Slows And Deflation Persists Despite Export Surge

• Q3 GDP likely near 4.7%: slowing investment, retail and housing weigh on growth

• Household consumption remains ~40% of GDP versus a 56% global average (World Bank data).

• China has recorded nine consecutive quarters of deflation, while exports hit new highs.

China economic slowdown: Q3 GDP ~4.7% amid weak investment and prolonged deflation; COINOTAG explains policy options to boost domestic consumption. Outlook.

By COINOTAG — Publication date: 2025-10-17. Updated: 2025-10-17.

What is the China economic slowdown?

China economic slowdown refers to the recent deceleration in GDP growth driven by falling investment, weaker retail sales, a sluggish property market and persistent deflationary pressures. Official data from the National Bureau of Statistics is expected to show year‑on‑year Q3 growth near 4.7%, even as exports reached record levels.

How are policymakers planning to respond to slower growth and export tensions?

Party officials are preparing to emphasise higher domestic spending and consumption at the upcoming key meetings that will set strategy for 2026–2030. Analysts at Societe Generale SA — Michelle Lam and Wei Yao — note that a consumption target would signal stronger policy commitment. Morgan Stanley economists, including Robin Xing, expect continued focus on technological self‑sufficiency, innovation and national security, alongside measured social‑welfare reforms to support demand.

Data context: household consumption accounts for approximately 40% of China’s GDP compared with a 56% global average, according to World Bank data. The economy is also registering its ninth consecutive quarter of deflation, a rare run not seen since market reforms began in the late 1970s. Those dynamics, paired with intensified US‑China trade frictions, have reduced returns on traditional investment and contributed to weaker industrial and retail performance.

Frequently Asked Questions

Will China adopt a formal consumption target in the 2026–2030 plan?

Officials and analysts have signalled a shift toward promoting consumption, but as of the latest reports there is no confirmed numeric target. Policymakers are likely to increase spending on education, job creation and social welfare to encourage household demand while balancing fiscal caution.

How fast is China’s GDP growing now?

Current official estimates point to Q3 GDP growth of about 4.7% year‑on‑year. Growth is concentrated in high‑tech manufacturing and exports, but weaker investment, a soft housing sector and falling consumer prices are pulling overall expansion lower.

Key Takeaways

• Growth slowdown: Q3 GDP likely near 4.7% as investment and retail weaken.
• Consumption gap: Household spending is ~40% of GDP vs 56% global average, highlighting room to boost domestic demand.
• Policy focus: Expect emphasis on consumption support, tech self‑sufficiency and measured social‑welfare reform to stabilise growth.

Conclusion

The China economic slowdown reflects a complex mix of weak domestic demand, prolonged deflation and the impact of heightened trade tensions. While exports have performed strongly, persistent investment and consumption shortfalls have prompted calls for a policy pivot toward boosting household spending and reinforcing supply‑chain resilience. COINOTAG will monitor National Bureau of Statistics releases and policy statements from upcoming party meetings for signals on concrete targets and fiscal measures.

Sources: National Bureau of Statistics (official data releases), World Bank (consumption as share of GDP), Societe Generale SA (Michelle Lam, Wei Yao report), Morgan Stanley (Robin Xing report), statements by Valdis Dombrovskis at the IMF meetings. All source names are shown as plain text per editorial policy.