China’s November retail sales rose 3% year-on-year, below the 4.6% forecast by Reuters.
This marked a sharp dip from October’s 4.8% surge, which had been buoyed by the early Singles’ Day shopping festival, a retail frenzy that acted as a shot in the arm for consumer spending.
Real estate investment—a cornerstone of China’s economy—continued to struggle.
Investment in the sector for the January-November period slumped by 10.4% year-on-year, worsening from a 10.3% decline the previous month.
The deepening property slump underscores the gravity of the sector’s woes, weighing on broader economic sentiment.
On the industrial front, there was a glimmer of hope.
Production rose 5.4% in November, just above economists’ expectations and slightly up from October’s 5.3% growth.
Yet, the broader economic landscape remains fraught with challenges, from sluggish consumer confidence to high unemployment and mounting local government debt.
Fixed asset investment, another economic barometer, grew by 3.3% for the year through November, falling short of projections and marking a slight slowdown from October’s pace.
Meanwhile, the urban unemployment rate held steady at 5% in November.
However, youth unemployment—excluding students—remained troublingly high, hitting 17.1% in October.
Policy Shifts Signal Urgency
China’s leadership is ramping up efforts to breathe life into the sputtering economy.
High-level policy meetings last week highlighted a strategic pivot toward spurring domestic consumption.
Officials pledged to deploy “proactive fiscal tools” and “moderately loose” monetary policies while promising to bolster demand “on all fronts.”
This marks a significant shift in rhetoric, with Beijing openly advocating for looser monetary measures for the first time since the 2008 financial crisis.
Stimulus measures have been steadily rolling out since September, including interest rate cuts and eased property purchase restrictions, which have sparked cautious optimism among businesses seeking stability in a volatile market.
In November, the government unveiled an ambitious five-year, 10 trillion yuan ($1.4 trillion) fiscal plan to address local government debt—a move that reflects the scale of the challenge at hand.
Persistent Economic Headwinds
Despite these measures, data from November highlighted stubborn deflationary pressures, underscoring weak consumer demand and hesitant business investment, which continue to drag on the economy’s recovery.
Consumer inflation hit a five-month low, with retail prices inching up by just 0.2% year-on-year.
Producer prices extended their record streak of declines, falling for the 26th consecutive month.
Trade figures also offered little reprieve. Imports dropped 3.9%, marking the steepest fall since September 2023, while export growth slowed to 6.7%, below expectations.
Although initiatives like trade-in programs for cars and home appliances have been introduced, the lack of targeted consumer stimulus remains a notable gap in Beijing’s strategy.
While policymakers laid out broad strokes for 2024’s economic direction, the specifics will only emerge in March during China’s annual legislative sessions.
Until then, the world’s second-largest economy will likely remain caught between stimulus ambitions and the weight of its entrenched challenges.
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