China’s economy is once again showing signs of trouble, with residents’ consumption credit shrinking in September, reflecting a weakened willingness of households to borrow and consume. Concurrently, domestic sales of China’s manufactured automobiles dropped significantly by 23%.
According to data compiled by the China Association of Automobile Manufacturers (CAAM), in September 2026, the total sales of domestically manufactured automobiles (including exports) in China decreased by 8.4% year-on-year to 2.956 million units. Domestic sales stood at 1.903 million units, a 23% decrease from the same period last year when it was 2.47 million units.
In terms of production, China’s total automobile output in September dropped by 8.7% year-on-year to 2.99 million units, signaling a contraction in the manufacturing activities of the automobile industry.
Chinese automakers have been actively expanding into overseas markets in recent years to cope with domestic competition and slowing demand. In September, overseas exports surged by 61%. However, this export growth also faces uncertainties such as trade policies. Market analysts believe that the sustainability of overseas markets in absorbing more Chinese-made electric vehicles will affect the future growth space of car companies.
An article published by The Economist on October 14 pointed out a significant decline in short-term consumer loans in China. In September 2026, short-term consumer loans in China fell by 8.3% year-on-year, marking the largest drop on record.
This change indicates a shift in the attitude of Chinese families towards borrowing, adding pressure to the already weak domestic demand.
Consumer credit is an important indicator to observe residents’ willingness to consume. When households reduce borrowing, it signifies consumers’ lack of confidence in future income and economic prospects. It also reflects tightening loan conditions by banks or households proactively reducing debt burdens.
The weakening of consumer credit in China is closely related to the persistently sluggish real estate market. Real estate is not only a significant asset for Chinese families but also an important component of bank loans and household wealth. Falling house prices and the long-term stagnation of the real estate market have weakened the sense of wealth for families, leading consumers to prefer savings and debt repayment over increasing consumption.
When residents lack confidence in future income and asset values, even if banks provide loans, it may not effectively stimulate borrowing and consumption.
Moreover, banks’ cautious risk assessment of borrowers has also limited the expansion of consumer credit. This means that China’s weak consumption is not just a short-term issue of willingness to consume but involves multiple factors such as household balance sheets, expectations of employment income, and the lending attitude of financial institutions.
The Chinese Communist government has been continuously introducing measures to stimulate consumption and support the real estate market in recent years, aiming to reduce the economy’s reliance on exports and manufacturing investment. However, the continuous decline in consumer credit reflects that policy stimuli may not swiftly translate into growth in household borrowing and consumption.
If households continue to reduce borrowing and increase savings, while businesses lack the willingness to expand investments, China’s economy may become more reliant on exports and policy support to maintain growth.