Resilience Amidst Challenges: China Stocks Surge Despite Weak Consumer Spending and Trade Tensions
China Stocks Rally Despite Soft Consumption Data and Rising Trade Tensions
By Bob Mason | Published: October 9, 2025, 03:43 GMT+00:00
China had a long Golden Week holiday. Soft data on spending and rising US–China trade tensions mark the scene. When markets reopened after the break, Chinese stocks jumped to new heights.
Weak Consumption Data Challenges Economic Optimism
China’s Golden Week shows a softer pace in spending. Passenger trips from October 1 to 5 grew 5.4% from last year. This rise is slower compared to the 7.9% climb seen during the May Labor Day holiday. The result creates a worry over local buying power. The government set a goal of 5% GDP growth for 2025. Research from Julius Baer, cited by CN Wire, points to a roughly 10% rise in domestic flight prices by year-end. The price move reflects a bid to hold prices steady instead of a rise in demand. Online sales managed steady shifts in home appliances and smart gadgets. Citibank analysts note that Chinese consumers spend slowly during the holidays.
Labor Market Pressure Weighs on Consumer Sentiment
Labor market data shows mounting pressure. Unemployment edged from 5.2% in July to 5.3% in August. Youth unemployment climbed to 18.6%. These changes lower consumer hope and slow spending. Companies face higher input costs, tariff stress, and soft prices. Firms cut staff and slow wage growth. These factors limit household budgets and the overall recovery pace.
Economic Outlook: Mixed Signals but Upward GDP Revisions
Forecasts for China’s growth mix good news with concerns. The World Bank raised its 2025 GDP forecast to 4.8% from 4.0% earlier. Growth in 2026 is expected to hit around 4.2%. Some see weaker external demand and a smaller role for fiscal support next year. Analysts expect Beijing to aim for a 4.5%–5.0% GDP target in the next five-year plan, to be set at the Fourth Plenary Session. UBS economist Ning Zhang notes that future policy may focus on more consumer support and social benefits. Changes in technology and industry will shape the path ahead.
Rising Trade Tensions Ahead of the APEC Summit
Trade tensions between the US and China grew during Golden Week. US lawmakers pushed to bar more chip-making tool exports to China. Their aim is to slow China’s progress toward chip self-sufficiency and to challenge low-priced exports. China responded by setting export controls on tech linked to rare earth mining and magnet making. The new rules, effective December 1, require export permits for items with dual uses. These steps show Beijing’s response ahead of talks. The APEC Summit, set for October 31 to November 1, will bring leaders like President Trump and President Xi together. A deal could boost market mood, and more tension might lower investor trust.
Market Reaction: Equities Surge to New Highs
Weak economic signals and rising trade risk did not hold back the market. When trading resumed, the CSI 300 index climbed 1.17% in the morning. It hit its best level since January 2022. The Shanghai Composite Index rose 0.75%, reaching a new peak in the decade. Year-to-date, the CSI 300 gained 19.53% and the Shanghai Composite saw a 16.80% rise. The Hang Seng Index in Hong Kong jumped 33.65% in 2025. Investors hope that new policy steps and calmer trade will boost the market further. Experts warn that a failure in US–China talks or weak policy measures could bring added risk.
Looking Ahead: Key Data and Policy Developments
Market watchers will monitor upcoming economic numbers and policy news from Beijing. They will focus on the outcomes of the Fourth Plenary Session and the details in the five-year plan. The APEC Summit is set as a key event. Decisions there may shape forecasts and market paths for 2026. —
In summary, while weak consumer data and a soft labor market may slow local spending, China’s stocks stay upbeat on hopes of new policy support and progress in trade talks. The link between domestic management and world trade rules will shape China’s near future.
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