Retail Sales Growth Limited to 1.3%
Consumer Sentiment Weakens Amid Real Estate Slump
Fixed Asset Investment Down 2.6% This Year
Last month, China's industrial production, consumption, and investment growth rates all fell short of expectations. Amid analyses that the downturn in the real estate market has negatively impacted consumer sentiment, the Chinese authorities have announced plans to issue ultra-long-term special government bonds to stimulate the economy.
According to the National Bureau of Statistics of China on December 15, industrial production in China last month increased by 4.8% compared to the same period in 2024. This is lower than October's 4.9% and also below the Reuters forecast of 5.0%. It marks the lowest industrial production growth rate in 15 months since August last year.
Due to sluggish domestic demand, retail sales in the same month rose by only 1.3% year-on-year, significantly below the market forecast of 2.8%, and more than halved compared to the 2.9% growth recorded in October.
Retail sales serve as an indicator of domestic economic activity, and China's retail sales growth rate has declined for six consecutive months since May. This is the longest period of slowing retail sales growth since the height of the COVID-19 pandemic in 2021.
Real estate indicators are also deteriorating. From January to November this year, real estate development investment amounted to 7.8591 trillion yuan (approximately 1,645 trillion won), down 15.9% from the previous year. Of this, housing investment was 6.0432 trillion yuan (about 1,265 trillion won), a decrease of 15.0% year-on-year.
During the same period, the construction area of Chinese real estate developers decreased by 9.6%. The areas of new construction starts and completions fell by 20.5% and 18.0%, respectively. At the same time, domestic loans (-2.5%), overseas investment (-24.6%), self-raised funds (-11.9%), and down payments and deposits (-15.2%) all declined.
Fixed asset investment, including real estate, from January to November decreased by 2.6% compared to the same period last year. This means that capital investment in factories, roads, power grids, and real estate, excluding rural areas, has dropped, and the decline was steeper than the 2.3% decrease expected by Reuters.
Zhang Zhiwei, CEO and Chief Economist of Pinpoint Asset Management, stated in a memo following the release of these figures that "the contraction in fixed asset investment and the decline in real estate prices in recent months have spread to consumer sentiment," according to CNBC. He predicted that more aggressive fiscal and monetary stimulus measures would be introduced in the first quarter of next year.
The Chinese authorities have pledged additional support to expand domestic demand and boost consumption and investment next year. On December 13, the Ministry of Finance of China announced plans to issue ultra-long-term special government bonds to fund major national strategic and security-related projects, as well as to promote domestic demand.
Meanwhile, China's national unemployment rate this month remained at 5.1%, the same as the previous month. The average unemployment rate for January to November was recorded at 5.2%.
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