Holding back: People along the Nanjing Pedestrian Road shopping area in Shanghai. Cosmetics led a drop in retail spending with a 26% plunge in sales from a year ago. — Reuters
Beijing: China’s retail sales growth unexpectedly weakened in November, highlighting the urgency for Beijing to further encourage residents to spend.
Retail sales rose 3% from a year ago, the National Bureau of Statistics (NBS) said yesterday.
That’s the slowest in three months and significantly weaker than October’s increase of 4.8%. The median forecast was 5% by economists surveyed by Bloomberg.
Industrial output increased 5.4%, slightly better than a 5.3% gain in the previous month and in line with economists’ projections.
“The economy was stable overall and progressed amid stability,” the NBS said in a statement accompanying the data release. “But we also need to see that the external environment is increasingly complex, and domestic demand is insufficient.”
The weakening in retail sales was surprising following strong sales of home appliances and cars a month ago thanks to government subsidies. Cosmetics led the decline with a 26% plunge in sales from a year ago.
The CSI 300 Index of onshore stocks dipped after the data release, down as much as 0.2%.
The benchmark 10-year yield extended a decline, falling almost four basis points on the day to a record low 1.74%. The yuan was steady in both onshore and offshore markets.
The world’s second-largest economy has shown tentative signs of recovery since October after Beijing announced a raft of stimulus measures to reach the 2024 growth target of around 5%.
Retail sales, which has been lagging industrial production since the pandemic, is under increasing spotlight as Beijing’s push for manufacturing to propel the economy has seen the United States and European Union accuse China of flooding their markets with cheap goods.
The threat of a new trade war with the United States after the re-election of Donald Trump may diminish exports’ role as a growth driver after contributing to nearly a quarter of economic expansion this year.
Top Chinese policymakers elevated the importance of growing spending at a meeting last week, promising to “forcefully lift consumption” and drive domestic demand “in all aspects.”
So far policymakers have largely kept investors guessing on the scale and specifics of their plans. Officials have resisted proposals from economists to hand out cash to consumers in recent years, with President Xi Jinping warning against falling into a trap of “welfarism”.
A slowdown of economic expansion in the last quarter to the weakest since early 2023 has prompted policymakers to deliver out-sized interest-rate cuts and support for the property and stock markets.
Authorities also rolled out a US$1.4 trillion debt swap programme to curb debt risks faced by local authorities and free up fiscal room for them to promote growth.
Governments at all levels accelerated bond sales in recent months, with net financing exceeding one trillion yuan or about US$137.4bil for four straight months through November.
That has yet to show an effect on investment, though.
Fixed-asset investment increased 3.3% in the first 11 months of the year from the same period in 2023, slowing from the pace in January-October.
Property investment fell 10.4% in the period, slightly worsening from a slump of 10.3% in the first 10 months, suggesting still subdued confidence among developers despite an initial recovery in housing sales and easing price declines. — Bloomberg
