China’s industrial output saw modest growth in November, but weak retail sales intensified pressure on Beijing to boost stimulus measures as the fragile economy prepares for potential U.S. trade tariffs under a second Trump administration.
The mixed set of data underlines the challenges facing Chinese leaders heading into 2025 when trade relations with the United States could worsen at a time when domestic consumption also remains weak.
“China’s economy appears to have slowed last month, despite tailwinds from recent policy easing,” said Julian Evans-Pritchard, head of China economics at Capital Economics.
“But we doubt that stimulus can deliver anything more than a short-lived improvement, not least because the current strength of export demand is unlikely to last once President Trump starts to put some of his tariff threats into action.”
China’s industrial output grew 5.4% in November year-on-year, up from the 5.3% pace seen in October, data from the National Bureau of Statistics (NBS) showed on Monday, beating economy expectations for a 5.3% increase in a Reuters poll.
However, retail sales, a gauge of consumption, grew just 3.3% last month, much slower than a 4.8% rise seen in October. Analysts had predicted a 4.6% expansion.
The weaker retail figures come despite a boost from major online shopping promotions and government-subsidised trade-in programs that have boosted sales in sectors including automobiles.
Fixed asset investment also increased at a slower 3.3% pace in January-November from the same period a year earlier, compared with an expected 3.4% rise. It grew 3.4% in the January to October period.
NBS spokesperson Fu Linghui told a media briefing that the trend of recovery in consumption has not changed and that more efforts would be needed to ensure the economic recovery continues into 2025.
At last week’s Central Economic Work Conference (CEWC), a closely-watched agenda-setting meeting, China’s top leaders pledged to raise the budget deficit, issue more debt, and make boosting consumption a top priority.
The remarks echoed commitments made by a meeting of top Communist Party officials, the Politburo, earlier this month, which endorsed an “appropriately loose” monetary policy in the first easing of its stance in 14 years.
Policymakers continue to grapple with a years-long property crisis that is dragging on consumer confidence and the broader economy, with some 70% of household savings parked in real estate.
There was some encouraging signs on China’s new home prices, which fell at the slowest pace in 17 months in November.
Officials in recent months have doubled down on efforts to encourage homebuying, including cutting mortgage rates and minimum down-payment ratios, as well as tax incentives to lower the cost of housing transactions.
However, most analysts say a sure-footed recovery in the real estate sector appears to be some way off.
Reuters has reported that policy advisers have recommended that Beijing maintain a growth target of around 5.0% for next year, with one government economist saying that China can offset the impact of expected U.S. tariffs on its exports and in turn its economy by further boosting domestic demand.
Trump, who is set to start his second term as the U.S. president in January, has threatened tariffs in excess of 60% on imports of Chinese goods.
Reuters also reported last week that China was considering allowing the yuan to weaken in response to punitive trade measures, but a readout from state media Xinhua after the CEWC reiterated a commitment to maintain the yuan’s basic stability.
A recent Reuters poll predicted China will grow 4.5% next year, with new U.S. tariffs potentially shaving up to 1 parentage point off growth.
(With inputs from Reuters)
