(Dec 15): China’s retail sales grew at the weakest pace since the crash caused by Covid while investment slumped further, underlining growing risks to the economy after several months of deterioration.
Retail sales rose just 1.3% in November from a year ago — the slowest figures on record, outside the pandemic. That was worse than every estimate in a Bloomberg survey of analysts, whose median forecast was for the growth pace to stay at 2.9% for a second month.
Industrial production climbed 4.8%, down from 4.9% in the previous month. Fixed-asset investment shrank 2.6% in the first 11 months of the year as property investment continued to crater. The urban unemployment rate was unchanged at 5.1%.
China’s 30-year government bond futures trimmed some declines after the data. Shares in Hong Kong held onto losses, with the Hang Seng China Enterprises Index falling as much as 1.2% before paring its drop.
“The economy faced a number of challenges” in November, the National Bureau of Statistics (NBS) said in a statement. “There were many external instabilities and uncertainties, and domestic demand was insufficient.”
China’s inability to revive consumer spending is exposing the economy to risks abroad, after it relied on foreign demand to propel growth for much of this year despite the tariff war unleashed by US President Donald Trump. Exports are broadly forecast to slow in the months ahead after a surprisingly strong 2025, as protectionism spreads and trade tensions intensify with countries beyond the US.
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China will adopt more proactive macroeconomic policies, keep expanding domestic demand and optimise supply, the NBS said.
Weak consumer and business demand at home has haunted the world’s No 2 economy for several years, resulting in entrenched deflation that’s hurting profits and wages. Signs abound that the worse is yet to come, with loan growth caught in a slowdown and a sharp and puzzling slump in investment in recent months.
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The slowdown in November’s consumption growth was likely caused in part by a weakening in car sales and an earlier-than-usual start of the Singles’ Day promotions. That calendar shift meant some demand moved into October, Goldman Sachs Group Inc. economists including Lisheng Wang wrote before the data release.
Retail sales also suffered from unfavourable statistical effects. China began rolling out government subsidies for household purchases of consumer goods in late 2024, creating a high base of comparison.
The fading effect of the trade-in subsidies was clear in the breakdown of spending figures in November. Sales of home appliances slumped 19% from a year ago, the worst reading since early 2020. Car sales fell 8% — their biggest drop since May 2022.
“The main reason for this is the impact of the trade-in policy turning from tailwind to headwind,” said Lynn Song, the chief economist for Greater China at ING Groep NV. “This means that next year we either need to see another expansion of the trade-in policy to cover new categories, or we need to see new methods to boost consumption.”
At key economic meetings held last week, China’s top leaders listed boosting domestic demand as the top priority in the new year, signalling vigilance against uncertainties in foreign trade. Despite a pledge to maintain policies supportive of growth, no aggressive measures appear to be on the cards for now.
“The contraction of real estate activities and the slowdown of retail sales have been moving in tandem,” said Raymond Yeung, the chief economist for Greater China at Australia & New Zealand Banking Group Ltd.
“Both are cooling more rapidly in the recent months,” he said. “This trend is against the leadership’s message of boosting domestic demand. The authorities will need to do something in 2026, and any policy measure has to be ground breaking and holistic rather than piece meals and short-lived.”
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