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Reading Mixed Signals from China's Economy

China released its October 2025 economic data again — and the conclusion is quite clear: recovery is continuing, but still lacks consistency. On one hand there is a slight stabilisation, but many key indicators have actually slowed again.
For a country as large as China, small changes can have significant impacts across Asia, including Indonesia. Let us explore what is actually happening.

1. Momentum Slowing
October data shows weakening across almost all major components:
Industrial Output Losing Speed
Industrial production is slowing due to:
- Weak global demand
- Global manufacturing sector has not yet recovered from cost pressures and order backlogs

Retail Sales Weakening
Retail sales, which had been a bright spot, are now also slowing.
Drivers include:
- Labour market concerns
- Pressure in the property sector
- Consumer behaviour returning to caution, with households deferring spending in favour of saving

Fixed-Asset Investment Remains Pressured
Long-term investment — from both the private sector and state-owned enterprises — continues to move slowly:
- Property remains weak, with many projects stalled
- The government is being more selective in promoting new infrastructure
- Corporations are deferring expansion as demand prospects are not yet solid

Together, these three indicators paint a picture that China's recovery is not yet strong enough to generate new momentum.

2. Exports Also Weakening — Effect of Tariffs & Global Demand
China's exports are only slightly down, but sufficiently relevant as a signal that:
- Global demand remains soft
- Many trading partners have not yet shown meaningful recovery
- High US tariffs continue to be a structural barrier, weighing on China's export competitiveness

For an economy still relying on foreign trade, this signal shows that external headwinds have not yet eased.

3. Business and Consumer Confidence Has Not Yet Recovered
Companies
Are holding back on expansion, not aggressively adding capacity, and focusing more on efficiency than new investment.
Households
Are still playing it safe, deferring major purchases, and worried about job prospects — particularly because the property market has not yet shown a turning point.
When confidence has not recovered, economies tend to move slowly even after stimulus is launched.

4. Impact on Asia & Indonesia: Spillover Effects Will Still Be Felt
China's economy has significant ripple effects.
Potential Impacts for Indonesia
- Commodity prices more vulnerable to decline, particularly coal and industrial metals
- CPO demand could be more volatile
- Manufacturing supply chains may be disrupted if China's factory activity is unstable

Indonesia is becoming increasingly self-sufficient in domestic demand, but the external side remains an important variable.
China is currently in a phase of non-linear recovery: sometimes up, sometimes down, without a solid recovery pattern.
Global investors are now awaiting two things from Beijing:
1. Stronger consumption stimulus
2. More decisive property stabilisation policies

As long as these two do not materialise, China's economy is likely to remain in a "stop-and-go" pattern.

Implications for Indonesian Investors:
- Sectors linked to China (mining, commodities, CPO) will be more volatile
- Increased focus on domestic sectors and higher value-added manufacturing becomes Indonesia's advantage
- Diversification into Balanced Funds and Fixed Income Funds can help cushion external effects