China’s retail sales growth has hit a three-year low, with a mere 1.3% year-on-year increase in November, according to official data released by the National Bureau of Statistics (NBS). This sluggish growth rate is the weakest since December 2022, when stringent zero-COVID measures were lifted. The figure falls short of a Bloomberg forecast of 2.9%, which was the same as October’s growth rate.
The Chinese government has been striving to revive the domestic economy, which has been battered by a prolonged debt crisis in the country’s vast property market. Reversing the slump has become a top priority for leaders, who have repeatedly vowed to boost weak activity at home despite a boom in exports to the rest of the world. Retail sales, a key indicator of consumption, have been a major concern, and the latest data suggests that the battle to kickstart consumption is far from over.
Despite the spending slump, China’s economy has been supported by robust exports, which have remained resilient in the face of a fierce trade war with the United States. The boom in shipments has kept production humming in the manufacturing powerhouse, which has already reached a historic trade surplus of over $1 trillion this year. However, factory activity growth weakened last month, with industrial production sliding to 4.8% year-on-year, the slowest in more than a year.
The data also showed that fixed-asset investment through the end of November was down 2.6% compared to the same period in 2024. Leaders recently held a key meeting focused on the economy, pledging to boost consumption, stabilize the property market, and create more employment opportunities. Economists have long called for Beijing to shift towards a growth model powered more by domestic spending than traditional engines like exports and manufacturing.
The price of homes, a key store of wealth for Chinese households, continued to drop, with new residential property prices in 64 out of 70 major cities surveyed by the NBS falling last month year-on-year. The contraction of fixed-asset investment and the drop in property prices have been transmitted to consumer sentiment, according to Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. He expects fiscal and monetary policies to be loosened somewhat in the first quarter of next year to stabilize the economic momentum.
The country’s surveyed unemployment rate stood at 5.1% in November, unchanged from the previous month. The latest data highlights the challenges facing China’s leaders as they seek to balance the need to boost domestic consumption with the ongoing impact of the trade war and the property market crisis. As the world’s second-largest economy, China’s growth trajectory has significant implications for the global economy, and the government’s next steps will be closely watched by investors and policymakers around the world.
