CHINA FACES A SHARP ECONOMIC SLOWDOWN

China remains one of the world's most powerful economies, with its influence still expanding in critical sectors. Its high-tech industries continue to grow, it is pushing aggressively for leadership in artificial intelligence, and its dominance over rare-earth minerals helped it clinch a trade truce with Washington.

- BY HOWINDIALIVES.COM

Yet beneath these strengths, a broader slowdown is settling in. Manufacturing has contracted for eight straight months, investment has recorded its steepest drop since 2020, and exports, long a pillar of growth, shrank in October. Domestic consumer confidence remains weak, reflected in sluggish retail sales. In past downturns, markets looked to Beijing for stimulus to steady growth. This time, that reassurance may not arrive.

PLATEAUING PRODUCTION

MANUFACTURING, FOR long China's growth engine, has stayed in contraction for eight straight months. The official purchasing managers' index was at 49.2 in November, below the 50 mark that separates expansion from contraction.

The private RatingDog survey, which tracks smaller export-focused firms, also slipped to 49.9, down from 50.6 in October. Actual factory output was flat, with the production sub-index holding at 50. The slowdown is evident in the financial health of industrial firms. Their profits fell 5.5% year-on-year in October, driven by 'involution,' the term for price competition due to overcapacity. With margins squeezed, manufacturers cut staff for a fourth month and ran down finishedgoods inventories at the fastest pace in three years.

There were pockets of resilience. High-tech manufacturing expanded for a tenth month, with a reading of 50.1 in November. But the gains were too narrow to offset the wider slowdown.

CAPITAL RETREAT