The Trivium China Podcast Ep 47 - China Shock 2.0: the trade implications of China’s new economic growth model
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Nov 15, 2025 Dinny McMahon, Head of Markets Research at Trivium, dives into China's economic landscape, addressing the implications of its new growth model. He explores the recent drop in October's economic output and its impact on investment and exports. The discussion reveals strategies China may employ to sustain export growth amid rising trade tensions and the potential for a 'China Shock 2.0' focused on advanced manufacturing. McMahon also highlights China's pivot towards free trade agreements and its approach to embed itself in global supply chains.
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Slowing Industry, Weak Investment Signals
- October data showed industrial output slowing to 4.9% and fixed-asset investment plunged, signaling a cyclical deceleration.
- Policymakers appear reluctant to unleash major stimulus, implying confidence the economy won't be in freefall.
Targeted Support, Not Big Stimulus
- Beijing mobilized policy banks and freed local bond issuance to support infrastructure without full-blown stimulus.
- Allocated funds will take months to feed through, implying near-term data may look weak despite policy support.
Services Mask Weak Goods Consumption
- Consumption goods slowed largely due to a 6.6% auto sales drop while services spending accelerated strongly.
- China is structurally shifting toward services, which masks strength not captured by goods-focused metrics.