A broad slowdown is gipping China’s economy—and the pressure is building

Subscribe to enjoy similar stories. 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 recently helped it clinch a trade truce with Washington.

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 heavy stimulus to steady growth. This time, that reassurance may not arrive. Manufacturing, for long China’s growth engine, has stayed in contraction for eight consecutive months.

The official purchasing managers’ index stood 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 into negative territory at 49.9, down from 50.6 in October. Actual factory output was flat, with the production sub-index holding at 50.

The slowdown is also evident in the financial health of industrial firms (those with annual revenue above CN¥ 20 million). Their profits fell 5.5% year-on-year in October, driven largely by “involution," the official term for cutthroat price competition caused by overcapacity. With margins squeezed, manufacturers cut staff for a fourth straight month and ran down finished-goods inventories at the fastest pace in nearly three years.