China's Industrial Production Grew in November as Expected But Retail Sales and Property Investment Underperformed

 

China's industrial production rose in line with expectations in November because September's stimulus measures from the Chinese government boosted business activity. However, retail sales missed expectations on persistently sluggish private consumption.

 

On Monday (Dec. 16), government data showed that November's industrial production rose 5.4% year-on-year, meeting expectations. The growth rate climbed slightly from 5.3% in October. The change suggests that implementing more supportive measures such as easier access to capital and improved liquidity has led to a rally in China's business activity, particularly in the industrial sector.

 

Except for industrial data, other economic indicators are less positive. Fixed asset investment, a key measure of capital spending by large firms, grew 3.3% in November, below the 3.5% estimate.

 

Stimulus measures have not worked on private consumption yet, based on the fact that China's retail sales grew 3% in November, far less than the expected 4.6% and last month's 4.8% gain. The subdued consumer spending forces China's economy to struggle with deflation. The government has done little to boost private consumption.

 

Monday's report by the National Bureau of Statistics (NBS) indicated that China's real estate investment fell 10.4% YoY in the first 11 months of 2024 following the 10.3% decline in January-October. Real estate sales by floor area fell 14.3% YoY in January-November, better than a 15.8% decrease in January-October. New construction starts by floor area fell 23.0% YoY, rising from the 22.6% decline in January-October. Capital raised by Chinese property developers fell 18.0% YoY, smaller than the 19.2% decline in January-October.