November blues: Retail slump, property woes show China’s economy not responding to Xi’s push

China’s economy in November has sparked concerns about its ability to boost domestic demand in a world full of uncertainties. Reports from the South China Morning Post and The Economic Times highlight mixed results in key areas like retail sales, property investments and industrial output. Data from the National Bureau of Statistics (NBS) shows that Beijing is facing challenges in balancing internal consumption with pressures from global trade raising questions about what lies ahead for 2025.

Retail sales falter

Retail sales, a key measure of consumer spending, grew by 3 per cent in November compared to the same time last year. This was slower than October’s 4.8 per cent growth and lower than the 5.3 per cent expected by experts. According to Fu Linghui, a spokesperson for China’s National Bureau of Statistics (NBS), the slowdown was partly because many sales from the “Double 11” shopping festival happened earlier in October. However, services-related spending continued to grow strongly helping to offset weaker retail sales.

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The South China Morning Post noted that while November’s retail figures seemed weak, combining data from October and November showed an improvement over the third quarter. Analyst Ding Shuang from Standard Chartered told the Hong Kong-based newspaper that these gains are short-lived. He stressed that for long-term growth China needs stable jobs, better income levels and policies to encourage people to spend rather than save.

Property sector remains a persistent drag

Despite President Xi Jinping continuous thrust, China’s property sector continues to hold back the country’s economic recovery. Fixed-asset investment—which includes spending on infrastructure, manufacturing and real estate—grew by 3.3 per cent in the first 11 months of the year, slightly less than the 3.4 per cent increase seen in October. Property investment, however, dropped by 10.4 per cent from January to November, worsening from the 10.3 per cent decline recorded earlier.

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Despite measures like lowering mortgage rates and downpayment requirements, China’s housing market has yet to see a strong recovery. According to The Economic Times, November had the smallest drop in new home prices in 17 months, offering some hope. However, experts say a full recovery in the real estate market is still far off.

Industrial output and mixed signals

On the positive side, China’s industrial output rose by 5.4 per cent in November, slightly better than October’s 5.3 per cent and above expectations. This shows a small recovery in the industrial sector, a vital part of the economy. Still, its growth is not enough to make up for weak retail sales and the struggling property market.

The South China Morning Post noted that many businesses still face challenges in production and operations. Fu from the NBS acknowledged these difficulties and called for stronger efforts to create jobs, raise incomes and strengthen the foundations of economic recovery.

Beijing’s policy response

China’s top leaders, meeting at the Central Economic Work Conference (CEWC), have made boosting domestic consumption a top priority for 2025, moving it up from second place in 2024. According to the South China Morning Post, the Politburo, the Communist Party’s main decision-making body, has promised “more active” fiscal policies and “unconventional” measures to drive steady economic growth.

To achieve this, the government plans to increase its budget deficit and issue more debt to fund projects aimed at boosting consumption and investment. However, Zhang Zhiwei, chief economist at Pinpoint Asset Management, pointed out to the South China Morning Post that these plans may not be strong enough to significantly change the current economic direction.

Global trade tensions add to challenges

China’s economic recovery is also facing external challenges, especially from global trade uncertainties. The re-election of former US president Donald Trump has raised concerns about renewed trade tensions as he has threatened to impose tariffs of over 60 per cent on Chinese goods. Experts warn this could reduce China’s economic growth by up to one percentage point in 2025.

In response, policymakers are debating whether to let the yuan weaken to counter the impact of US tariffs. While some believe a weaker currency could help, China’s state media, Xinhua, has reaffirmed the government’s commitment to keeping the yuan stable.

A path forward

Beijing’s ability to tackle its economic challenges depends on balancing quick fixes with long-term reforms. Boosting consumption, a key focus of its economic plan, needs more than temporary measures like shopping festivals and trade-in schemes. The property sector also needs continuous attention. While recent policies have slowed its decline, deeper issues in the real estate market remain unresolved.

China’s November economic data highlights mixed results. Retail sales are slowing, the property market is struggling and industrial output shows only slight growth. These factors present major challenges for Beijing’s 2025 goals.