What does GDP growth (and investment growth) mean in China?

CHINA FINANCIAL - Report 19 Nov 2025 by Michael Pettis

Special points to highlight in this report:

- Little good news came out of October’s data release. Growth in value-added industrial production was down. Retail sales growth was also down, and remained lower than growth in industrial production for both October and 2025 year to date.

- What attracted the most attention was that investment growth was actually negative, declining 1.7% year on year in the first 10 months of 2025. Given how important investment is as a source of GDP growth in China (well over 40%, in a world in which it averages 25%, and in which 30-35% is considered extremely high) it is puzzling that investment growth can decline, even as GDP growth is on track to meet the 5% growth target set both last year and this year.

- The answer has to do with the different way investment is calculated in the monthly data and in the annual data (once a year in February). For that reason, it may make sense to think a little more deeply about the meaning of investment in Chinese statistics.

Now read on...

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