China’s economic strain: Retail sales growth drops to three year low; factory output also fails to meet forecasts

China’s latest economic data for November indicated to a further loss of momentum, as retail sales slipped to a three-year low in November and both consumer spending and investment weakened, fuelling concerns about how sustainable the recovery is after months of deteriorating conditions. Figures released on Monday by the National Bureau of Statistics showed that retail sales increased by only 1.3% from a year earlier, marking the slowest growth since the Covid period and falling well short of expectations. The figures missed Bloomberg’s estimate, that had projected sales growth to hold steady at 2.9%, similar to October.Factory output also softened, with industrial production expanding 4.8% in November, missing Reuter’s estimate of a 5% rise. A month earlier, the figures stood at 4.9%. Investment activity also remained under pressure, as fixed-asset investment declined 2.6% in the first 11 months of the year amid a continued collapse in property investment, according to Bloomberg. The urban unemployment rate was unchanged at 5.1%, indicating little improvement in labour market conditions. Annual car sales also plunged to 8.5% in November, marking the steepest decline in 10 months. The figures came as a disappointment to an industry that usually sees a strong sales in the last two months of a year, Reuters reported. It further added that even after the Singles’ Day Shopping festival stretched across five weeks this year, failed to woo customers. China’s difficulty in reviving domestic consumption is making the economy more exposed to external risks. In recent months, growth has relied largely on overseas demand, even as the tariff war launched by US President Donald Trump continues to reshape global trade. At home, weak demand from consumers and businesses has dragged on the world’s second-largest economy for years, leading to deflation that has hit profits and wages. Recent trends, according to Bloomberg, point towards further headwinds, with loan growth slowing and investment registering a sharp and unexplained drop in recent months. These concerns were reflected in last week’s high-level economic meetings, where China’s leadership placed the expansion of domestic demand at the top of the agenda for the year ahead, citing uncertainty in foreign trade. While officials reaffirmed their intention to keep growth-supportive policies in place, they stopped short of signalling any immediate, forceful intervention.