China’s retail sales missed expectations in November, adding to pressure on policymakers to boost the economy. The consumption measure grew 3% year-on-year, below the forecast of 4.6% and last month’s rise of 4.8%. Industrial production, however, added 5.4%, slightly above predictions.
The disappointing retail sales data comes days after the Communist Party leadership called for “vigorous” efforts to boost consumption and domestic demand at the annual Central Economic Work Conference. Beijing has struggled to boost confidence against a backdrop of a property slowdown, now entering its fourth year, and bouts of deflation.
To address these challenges, the government unveiled measures to boost stock markets in late September and refinance local government debt last month. However, Chinese equities fell on Monday, with the CSI 300 index closing down 0.5% and Hong Kong’s Hang Seng index falling 0.9%.
The data has raised concerns over the strength of domestic demand, which was an economic concern during the Covid-19 pandemic when strict lockdowns were imposed to prevent the spread of the virus. Consumer spending has failed to bounce back fully since a reopening almost two years ago.
Analysts attribute the soft retail sales to an earlier-than-usual start to the annual “Singles Day” online shopping festival, which pulled forward some sales to October. However, indicators suggest that overall, China’s economic growth this year will end close to the government’s official target of 5%. President Xi Jinping pledged to meet the target, saying China would continue to be the world’s largest economic growth engine.
The next move for policymakers is uncertain, with economists suggesting that few details on proposed fiscal stimulus measures will be released until early next year during the annual meeting of China’s rubber stamp parliament.
Source: https://www.ft.com/content/a1c39f1b-bf6c-4845-839c-81be269c4468