China in the doldrums in October

Data highlight economic challenges of low domestic demand, US trade war

- JOE CASH

China’s factory output and retail sales grew at their weakest pace in over a year in October, piling pressure on policymakers to revamp the $19 trillion export-driven economy as a trade war with the US and weak domestic demand heighten risks to growth.

For decades, the officials charged with keeping the world’s second-largest economy humming have had the option of spurring its vast industrial complex to boost exports should consumers tighten spending at home or reaching into the public purse to fund GDP-boosting infrastructure projects.

But US President Donald Trump's tariff war is providing a stark reminder of the manufacturing juggernaut's reliance on the world’s largest consumer market, and even an economy of China’s size can only squeeze so much growth from building more industrial parks, power substations and dams.

Yesterday's indicators gave little hope for a quick turnaround, and the worse the data gets every month, the more urgent the need for reform becomes.

“China's economy is facing pressures from all sides,’ said Fred Neumann, chief Asia economist at HSBC.

“The strong lift from exports that supported growth in recent quarters will be hard to sustain into next year, even if US import tariffs now turned out lower than feared. That leaves domestic demand to pick up the slack, but without significant further stimulus, it will be hard to reverse recent slowing in both investment and consumption,” he added.