China GDP Slows, Industrial Output Jumps after Export Surge; AUD/USD and Hang Seng Climb

China Economic Data Eases Growth Jitters, Lifting Sentiment

Chinese economic indicators topped estimates, easing fears that US tariffs could impact economic momentum. The September and third-quarter data coincided with the start of the Communist Party’s Fourth Plenum and shifting US-China trade tensions.

Housing Price Fall Slows, Lifting Sentiment

China’s housing sector slump remained a focal point for investors after consumer sentiment and spending weakened further in August. Analysts view the housing sector as a key cause of the pullback in private consumption, challenging Beijing’s 5% GDP growth target.

September house price data provided some much-needed market relief. House prices fell 2.2% year-on-year in September after dropping 2.5% in August. While the year-on-year price decline slowed, the monthly data suggests continued pressure on prices over the longer term. CN Wire reported:

“China Sept. home prices fell on month in 63 of 70 cities vs. 57 in August, on year in 61 of 70 cities vs. 65 in Aug.”

The Hang Seng Mainland Properties Index was up 0.75% to 1,343 in the morning session on October 20, 2025. The Index briefly climbed to a high of 1,344 before dropping to a low of 1,336, reflecting sentiment toward the month-on-month price trends.

China’s GDP Growth Slows to 4.8%, But Industrial Production Rebounds

Chinese economic indicators signaled a brief slowdown in overall momentum in the third quarter, though September’s rebound in industrial production offered signs of stabilization.

GDP growth slowed from 5.2% year-on-year in the second quarter to 4.8% in the third quarter. Notably, retail sales continued to weaken, rising 3% year-on-year in September after a 3.4% increase in August.

However, industrial production jumped 6.5% year-on-year, up from 5.2% in August, signaling strong domestic and external demand. September’s rebound aligned with the end of the third-quarter jump in imports and exports. The upswing in production and external demand contributed to 1.1% GDP growth quarter-on-quarter in the third quarter, mirroring the second quarter momentum.

Crucially, the upswing in demand and output has boosted hiring, with the unemployment rate falling from 5.3% in August to 5.2% in September.

Rising external demand, increasing productivity, and falling unemployment could lift consumer sentiment. An uptick in sentiment may boost private consumption, raising expectations that Beijing will achieve its 5% GDP growth target.

Market Reaction to China’s Economic Indicators

The Hang Seng Index and the AUD/USD pair reacted to the better-than-expected data amid easing US-China trade tensions.

On Monday, October 20, the Hang Seng Index was up 2.09% to 25,774. The Index fell from an early high of 25,885 to a low of 25,771 on the People’s Bank of China’s decision to maintain loan prime rates and September house price data.

However, GDP, industrial production, and retail sales beat forecasts, while unemployment unexpectedly fell, triggering a recovery from session lows.

In the forex markets, the better-than-expected retail sales, unemployment, and industrial production numbers lifted demand for the Aussie dollar. AUD/USD rose from $0.65049 to $0.65117 before easing back to $0.65103, up 0.31% at the time of writing.

The September and third-quarter data suggest that Beijing weathered the US trade war storm, raising the stakes ahead of this month’s APEC Summit. On Sunday, October 19, President Trump confirmed he will be meeting with President Xi at the Summit, fueling speculation about a trade deal.

Looking Ahead

The outcome of US-China trade talks at the APEC Summit could be pivotal for Mainland China and Hong Kong-listed stocks. A trade deal, including lower US tariffs on Chinese shipments, could boost risk appetite. However, failure to reach an agreement could expose markets to more tit-for-tat moves, weighing on sentiment.

While the APEC Summit will be the main event, traders should closely monitor updates from China’s Fourth Plenum. Beijing could announce further policy pledges and its GDP growth targets for the next five years. Pledges to address housing sector woes and boost domestic demand could increase demand for HK and Mainland-listed stocks.

Track the latest developments and policy signals here. Given the latest data, a cautious approach is essential.