Shoppers pass a Huawei Technologies Co. store on Nanjing East Road in Shanghai, China, on Wednesday, Oct. 2, 2024. Qilai Shen | Bloomberg | Getty Images
China’s retail sales in November grew by just 3% compared to the same month last year, falling short of the 4.6% growth predicted by analysts in a Reuters poll. This data, released on Monday by the National Bureau of Statistics, highlights the ongoing challenges facing the world’s second-largest economy as it struggles to recover from a sluggish year.
The slowdown is significant, especially after October’s retail sales saw a sharp 4.8% increase, the fastest growth since February. October’s boost was partly driven by the early start of the Singles’ Day shopping festival, a major retail event in China. However, November failed to sustain this momentum, reflecting deeper issues in consumer confidence and spending power.
Adding to the economic woes, the real estate sector continued to decline. Investment in property fell by 10.4% in the January-November period, a deeper contraction than the 10.3% drop recorded in the first ten months of the year.
On a more positive note, industrial production grew by 5.4% year-over-year in November, slightly surpassing expectations of 5.3% growth. This indicates resilience in manufacturing and industrial output, though it is not enough to offset broader economic challenges.
Fixed asset investment, a key measure of infrastructure and real estate spending, grew by 3.3% through November. This was below the forecasted 3.4% growth, signaling weaker-than-expected recovery efforts in critical economic sectors.
The unemployment rate in urban areas remained steady at 5% in November, consistent with October’s figures. However, youth unemployment remains a significant concern, with the jobless rate for 16-to-24-year-olds reaching 17.1% in October, following a record high of 18.8% in August.
China’s government has acknowledged the need for stronger measures to address the faltering economy. During recent high-level economic policy meetings, top officials outlined plans to boost domestic consumption and implement “proactive fiscal tools” and “moderately loose” monetary policies in the coming year. This marks a shift in strategy, with a focus on stimulating demand to counteract deflationary pressures and trade challenges.
Since September, Beijing has introduced several measures to support the economy, including interest rate cuts, eased property purchase restrictions, and a 10 trillion yuan ($1.4 trillion) program to address local government debt. However, these efforts have yet to deliver substantial results for consumer spending.
November’s data also showed consumer inflation at a five-month low, with retail prices rising just 0.2% compared to the previous year. Producer prices continued their downward trend for the 26th consecutive month, reflecting ongoing deflationary concerns.
Trade performance also reflected mixed signals. While exports grew by 6.7%, the increase was smaller than expected. Imports, on the other hand, dropped by 3.9%, marking the sharpest decline since September 2023. Weak consumer demand is a clear factor in these numbers.
China’s leadership has promised more targeted actions to lift consumer confidence. However, specific details on these plans are expected to emerge during the annual legislative sessions in March. Until then, the country faces the difficult task of balancing short-term recovery efforts with long-term economic stability.
Despite recent challenges, China remains committed to reviving growth. Officials have emphasized the importance of stimulating demand “on all fronts” to navigate the complex global economic environment and maintain the country’s standing as a key driver of the world economy.
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