Chinese economic slowdown deepens as weak consumption and falling investment miss November expectations

China’s retail sales growth and industrial production both fell short of expectations in November, while investment declined more sharply than forecast, according to data released by the National Bureau of Statistics on December 15. The figures highlight persistent weakness in domestic consumption, which remains one of the country’s most pressing economic challenges. Retail sales increased by just 1.3 per cent in November from a year earlier, significantly missing the Reuters’ median forecast of 2.8 per cent growth. The reading also marked a sharp slowdown from the 2.9 per cent expansion recorded in the previous month.

Industrial production rose 4.8 per cent year-on-year in November, slightly lower than October’s 4.9 per cent increase and below expectations for a 5 per cent rise. The data point to continued softness in manufacturing momentum despite policy support measures. Investment in fixed assets, which includes property investment, contracted by 2.6 per cent during the January–November period compared with a year earlier. This was worse than economists’ estimates of a 2.3 per cent decline and represented a deepening from the 1.7 per cent contraction recorded in the January–October period. According to data from Wind Information, the decline marked the sharpest slump in fixed-asset investment since the outbreak of the COVID-19 pandemic in 2020, based on records going back to 1992. “The contraction of fixed asset investment and the drop of property prices in recent months have been transmitted to the consumer sentiment,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said in a note following the data release. He added that he expects more supportive fiscal and monetary stimulus measures to be rolled out in the first quarter of next year.

Investment in real estate fell 15.9 per cent in the first 11 months of this year, worsening from the 10.3 per cent decline recorded in the January–October period, as the prolonged property downturn continued to weigh on the broader economy. Further evidence that the real estate sector has yet to find a bottom emerged from housing price data. In November, price declines across 70 major cities accelerated. New home prices fell 1.2 per cent year-on-year in tier-one cities, including Beijing, Guangzhou and Shenzhen, while resale home prices dropped 5.8 per cent compared with a year earlier. Economists at Goldman Sachs, in a preview published last week, pointed to falling auto sales as a major drag on overall retail performance. They also cited a “negative distortion” effect from the earlier-than-usual start of the Singles’ Day online shopping festival, which pulled some consumer demand forward from November into October.

Data from the China Automobile Dealers Association showed that auto retail sales by volume declined for the first time in three years in November. Sales dropped 8.1 per cent from a year earlier to 2.23 million vehicles, as many local governments paused trade-in subsidy programs. In an effort to stimulate spending, several major online shopping platforms extended their promotional periods, running campaigns from the first half of October through to Nov. 11. This marked the longest Singles’ Day sales period on record. Despite these efforts, overall sales performance disappointed as consumers continued to curb discretionary spending. According to data from Syntun, gross merchandise volume during the Singles’ Day shopping period grew by just 12%, compared with 20% growth last year, underscoring the cautious mood among households. Chinese policymakers have repeatedly pledged additional policy support to boost domestic demand and strengthen consumption and investment in the coming year.

In a statement released on December 13, China’s Ministry of Finance said it plans to issue ultra-long-term special government bonds next year to fund projects aimed at strengthening national security. The proceeds will also be allocated to equipment upgrades and consumer goods trade-in programs. The ministry further pledged to expand its investment budget in an effort to stabilise fixed-asset investment, which has weakened in recent months amid the property downturn. China’s trade surplus surged to a record $1.1 trillion in November, surpassing its full-year record of $992.2 billion set in 2024 in just 11 months. The sharp rise has fuelled growing concerns internationally over China’s increasingly unbalanced trade structure and its heavy reliance on external demand.