China's November retail gross sales fall in need of expectations as financial issues worsen

Shoppers walk past a Huawei Technologies Co. store on Nanjing East Road in Shanghai, China, on Wednesday, October 2, 2024.

Qilai Shen | Bloomberg | Getty Images

China's retail sales rose 3% in November from a year earlier, missing a 4.6% forecast in a Reuters poll, according to National Bureau of Statistics data released on Monday.

That marked a sharp slowdown from the previous month's 4.8% growth. Retail sales in October posted the fastest growth since February, helped by the annual Singles' Day shopping festival, which began more than a week earlier than the 2023 event.

Industrial production rose 5.4% in November from a year earlier, above expectations for 5.3% growth from economists polled by Reuters, compared with a 5.3% rise the previous month.

The world's second-largest economy has struggled this year under pressure from multiple fronts. Consumer and business confidence was hit by a prolonged housing downturn, local government debt risks and high unemployment.

Stuttering recovery

Last week, Chinese leaders signaled increased urgency to shore up the battered economy at high-level economic policy meetings, while shifting the country's policy focus to boosting consumption as Beijing braces for a possible escalation in trade tensions with the United States

According to state news agency Xinhua, top officials pledged to introduce “proactive fiscal tools” and “moderately loose” monetary policy next year, as well as to “vigorously” boost domestic consumption and boost demand “on all fronts.”

This was the first time since the depths of the global financial crisis in 2008 that Beijing admitted that its monetary policy should be loose.

Since late September, Beijing has stepped up its stimulus announcements to shore up the faltering economy, including multiple interest rate cuts and relaxed rules on property purchases. On the fiscal front, the Finance Ministry in November unveiled a five-year, 10 trillion yuan ($1.4 trillion) program to address local government debt problemsS.

Nevertheless, recent economic data from China has underscored ongoing deflationary pressures in the weakening economy.

Consumer inflation fell to a five-month low in November, with retail prices rising a muted 0.2% from a year earlier. China's producer price index continued its downward trend, falling for the 26th consecutive month.

The country's imports fell 3.9%, the sharpest decline since September 2023, due to sluggish consumer demand, while exports rose a less-than-expected 6.7%.

Beyond a trade-in program to incentivize sales of cars and home appliances, Beijing's stimulus measures announced so far do not directly target consumption.

While last week's economic planning sessions set broad policy priorities and directions for next year, further specifics and specifics will not be revealed until the annual legislative sessions in March.

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