New official data has revealed a significant slowdown in consumer spending within China, the world's second-largest economy. Retail sales growth for November hit its weakest point in almost three years, underscoring the persistent challenges Beijing faces in stimulating domestic demand.
Key Economic Indicators Show Weakness
According to figures released by the National Bureau of Statistics (NBS) on Monday, December 15, retail sales rose by just 1.3 per cent year-on-year in November. This marks the most sluggish pace of growth since December 2022, when the country finally abandoned its strict zero-COVID policies. The reading fell far short of the 2.9 per cent increase forecast by Bloomberg and matched the disappointing figure from October.
Analysts were quick to point out the broad implications. "Monday’s data point to broad-based weakness in domestic activity," wrote Zichun Huang, an economist at Capital Economics. She added that while policy support might spur a partial recovery soon, it likely won't prevent China's overall growth from remaining subdued throughout 2026.
The Export Engine vs. Domestic Struggles
In a stark contrast, China's export sector has shown remarkable resilience. Despite an ongoing and fierce trade confrontation with the United States, strong overseas shipments have kept the country's factories busy. This surge has contributed to a historic trade surplus exceeding $1 trillion this year.
However, this external strength is being offset by internal softness. Industrial production growth also weakened in November, expanding by 4.8 per cent year-on-year, which was the slowest rate in over a year and slightly below expectations.
"External demand for Chinese goods appears to be picking up… but that was offset by weakness in domestic demand," Huang noted in her research.
Property Slump Weighs on Consumer Sentiment
The data further highlighted deep-seated issues in the economy, particularly the prolonged crisis in the property market, which is a major store of wealth for Chinese households. Fixed-asset investment fell by 2.6 per cent in the first eleven months of 2024 compared to the same period last year.
Meanwhile, home prices continued their decline, with new residential property prices dropping year-on-year in 64 out of 70 major cities surveyed. This decline is directly impacting how people feel about spending.
"The contraction of fixed-asset investment and the drop of property prices in recent months have been transmitted to the consumer sentiment," explained Zhiwei Zhang, president of Pinpoint Asset Management. He anticipates a loosening of fiscal and monetary policies in the first quarter of next year to help stabilise the economy.
The Chinese leadership acknowledged these pressures during a key economic meeting last week, pledging to boost consumption, stabilise the property sector, and create jobs. The surveyed unemployment rate held steady at 5.1 per cent in November. Economists continue to urge a decisive shift towards a growth model powered more by domestic spending rather than exports and manufacturing.
