SSE Index Climbs as Economic Data Balances Growth with Concerns

The SSE Composite Index closed with a 0.63% gain today, as markets digested China's latest economic data. The third quarter GDP growth, while meeting expectations, revealed underlying vulnerabilities within the Chinese economy.

The SSE Composite Index's positive movement reflects a market weighing the positives of in-line GDP growth against the negatives of contracting fixed-asset investment. This delicate balance has resulted in moderate gains, suggesting a cautious optimism prevailing amongst traders.

China's GDP expanded by 4.8% year-on-year in the third quarter of 2025. This figure, whilst aligning with analyst forecasts, represents a slowdown from the 5.2% growth recorded in the previous quarter. The deceleration is attributed to a persistent property slump and ongoing trade tensions, factors that continue to weigh on overall demand.

Of particular concern is the unexpected contraction in fixed-asset investment, which fell by 0.5% in the first nine months of the year, driven by reduced spending on infrastructure and manufacturing. Further exacerbating the situation, property investment continued its downward trajectory, declining by 13.9% year-to-date through September, compared to a 12.9% decrease in the first eight months.

Retail sales saw a 3% increase in September compared to the same period last year, matching analyst anticipations. However, this growth rate signifies a weakening from the 3.4% year-on-year increase observed in August, indicating a potential loss of momentum in consumer spending.

Conversely, industrial production demonstrated resilience, rising by 6.5% year-on-year in September, exceeding forecasts and signaling a robust manufacturing sector. Additionally, China's exports have remained strong despite ongoing trade tensions, contributing positively to overall economic performance.

Inflationary pressures presented a mixed picture.

The core consumer price index, excluding food and energy, rose at its fastest pace since February 2024. However, headline inflation fell by 0.3%, missing expectations and revealing persistent deflationary forces. In response to these conditions, China's monetary policy remained stable, with benchmark lending rates unchanged for the sixth consecutive month. The one-year loan prime rate remains at 3%, and the five-year rate at 3.5%.

The market's reaction to this data reflects a complex interplay of factors. While the GDP growth met expectations, the contraction in fixed-asset investment raises concerns about future economic momentum. The property sector's continued decline remains a significant headwind, and the slowdown in retail sales suggests potential weakness in consumer demand.

The resilience of industrial production and exports offers some reassurance, but the persistent deflationary pressures and unchanged lending rates underscore the challenges facing the Chinese economy.