Latest economic data released by the Chinese regime show the Purchasing Managers’ Index (PMI) in almost all sectors falling below the threshold into negative growth in October, indicating that the broader Chinese economy is now in a state of contraction, according to analysts who spoke with The Epoch Times.
China’s manufacturing PMI fell to 49.3, the construction industry activity index fell to 48.0, while China’s non-manufacturing purchasing managers index (NMI) also was down, falling 0.5 points to 49.7 from 50.2 in September, according to the data release by China’s National Bureau of Statistics on Oct. 31.
Both PMI and NMI use 50 as the boom-and-bust line. A value above 50 indicates expansion, heading toward prosperity; a value below 50 indicates contraction, going toward recession.
The October data also shows that both supply and demand in the manufacturing sector fell below the threshold: the production index for October stands at 49.8 (down 1.9 points), and the new orders index is at 49.4, down 1.1 points; while the new export orders index was at 48.7, down 1.3 points from the previous month.
Meanwhile, the business activity index for the service sector in October stood at 50.0—exactly at the threshold between expansion and contraction, the lowest in three months, while the new orders index (45.2), sales price index (49.6), and employment index (46.7) all fell below 50.
Average spending during the “Golden Week” (National Day holiday) in early October, which usually reports a boom in consumption and service, fell to the lowest level since 2022, down by 1.9 percent year-on-year to 893.92 yuan (about $134).
Facing intense competition, businesses lowered average selling prices for the second consecutive month; meanwhile, rising costs for fuel, raw materials, and wages pushed input costs to their highest level in five months.
These latest figures reflect a triple pressure facing the Chinese economy: insufficient domestic demand, weakening external demand, and sluggish investment, Sun Kuo-hsiang, a professor of international affairs and business at Nanhua University in Taiwan, told The Epoch Times.
“Furthermore, the economic slowdown is no longer confined to the real estate sector or isolated industries; rather, it is spreading to the manufacturing, service, and construction sectors,” Sun said.
“In particular, the new export order index for the manufacturing sector has fallen to 48.7, while the index for the construction sector has dropped even further to 48.0—signaling that both export momentum and investment demand are under pressure. China has long relied on investment and exports to compensate for weak domestic consumption, but now these two growth drivers are also facing challenges.”
This means the Chinese economy is facing more than just short-term cyclical fluctuations; it is grappling with a structural predicament stemming from an over-reliance on production expansion, insufficient household consumption capacity, and ongoing adjustment in the real estate sector, Sun said.
These indices reveal that the reality of China’s economic decline is becoming increasingly difficult for the Chinese communist regime to conceal, Frank Xie, a professor in Business at the University of South Carolina Aiken’s School of Business, told The Epoch Times.
“Looking at the manufacturing sector, the outlook for China’s economy is very bleak. In other words, the economy continues to slide, and as we enter the fourth quarter of this year, the prospects appear even more dire,” Xie said.
The Chinese regime’s official Gross Domestic Product (GDP) growth rate for the first three quarters of this year is 4.6 percent. The official targeted growth rate for 2026 is 4.5 percent–5 percent. However, it’s been questioned by international rating firms.
The Rhodium Group, a U.S.-based research firm, estimates that China’s GDP growth for the year will be around 0 percent. Their analysis suggests that, given sluggish growth in retail sales and a sharp decline in fixed-asset investment, it is impossible for China to achieve the targeted 4.5 percent growth rate.
Capital Economics estimates, based on its own proprietary model, that China’s GDP growth for the third quarter was 2 percent. The research firm’s model incorporates a wide range of data—such as intercity passenger traffic and industrial electricity consumption—that are difficult to manipulate.
In his research report “An Analysis of Date Manipulation in China’s Economic Statistics” published in May, Wang Guo-chen, an assistant researcher at the Chung-Hua Institution for Economic Research in Taiwan, noted that the official first-quarter GDP figure of 33.4 trillion yuan ($5 trillion), as reported by the Chinese regime, is 21.5 percent higher than the estimate derived using the “expenditure approach”—a method for calculating GDP that is standard internationally. Based on the expenditure approach, China’s actual GDP growth rate for the first quarter was “-1.5 percent,” representing a 1.5 percent contraction.
The Chinese Communist Party (CCP) has long relied on economic development outcomes as a key metric of its governing performance, Sun said of the Chinese regime’s fabrication of data and inflation of economic figures.
“Admitting to a significant economic slowdown could invite external scrutiny and skepticism toward its existing economic policies and governance capabilities,” he said.
However, once the market no longer has full confidence in the CCP’s official data, “it not only undermines the confidence of foreign investors but also weakens the Chinese government’s ability to assess economic issues and formulate effective policies,” Sun said.
Xie said the CCP’s motive for creating an illusion of economic prosperity is to safeguard Communist Party rule and maintain the stability of its regime.
Cheng Wen, Yi Ru, and Zhao Bin contributed to this report.
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