China’s economy stabilises as retail sales beat expectations
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Retail sales in October increased 4.8 per cent from a year earlier, the best reading since February.
PHOTO: BLOOMBERG
BEIJING - China’s economy showed signs of stabilisation in October, buoyed by the highest retail sales growth in eight months and indicating that Beijing’s latest round of stimulus has boosted some key sectors.
Retail sales increased 4.8 per cent in October from a year ago, the strongest growth since February and exceeding all estimates in a Bloomberg survey. Industrial output rose 5.3 per cent, lower than forecast.
The strength in retail spending represents improvement in a part of the economy that has struggled with sluggish sentiment and trailed growth in production, which has long benefited from Beijing’s manufacturing-focused policy support.
“The policymakers will be pleased to see the rally in retail sales,” said Mr Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group. “They’d rather sacrifice a bit of factory activity for consumption, although it is still early to tell whether the two-speed economy has ended.”
The indicators, released by the National Bureau of Statistics (NBS) on Nov 15, captured the immediate effects of China’s boldest stimulus measures since the Covid-19 pandemic that aimed to ensure the country reaches its annual growth target of around 5 per cent.
Beijing has also sought to spur consumer spending by subsidising purchases of equipment, appliances and cars in a programme announced earlier in 2024 and ramped up in the last few months. The sales of home appliances rose 39 per cent compared with the same period in 2023, the fastest growth since 2010.
The question now is how far Beijing is willing to go to shore up domestic demand and tackle deflation. Boosting consumption could become even more pressing after the re-election of Donald Trump as US president
“We should be aware that the external environment is increasingly complicated and severe, effective demands are still weak at home and the foundation for continuous economic recovery needs to be strengthened,” the NBS said in a statement.
China’s economic growth would suffer a hit of as much as 2 percentage points if Trump follows through on 60 per cent tariffs, economists at Standard Chartered and Macquarie Group project.
A slowdown of economic expansion in the last quarter to the weakest since early 2023 has prompted policymakers to deliver outsized interest rate cuts and support for the property
The authorities also rolled out a US$1.4 trillion (S$1.88 trillion) debt swap programme
Finance Minister Lan Fo’an has promised “more forceful” fiscal policy in 2025, hinting at an increase in the budget deficit, an expansion in special local bond issuance and freer use of the funds raised. He also suggested greater support for a cash-for-clunkers programme to spur consumer spending.
Governments at all levels accelerated bond sales in recent months, with net financing exceeding 1 trillion yuan (S$186 billion) for three straight months through October.
That has yet to show an effect on investment, though. Fixed asset investment increased 3.4 per cent in the first 10 months of 2024 from the same period in 2023, maintaining the same pace in January to September.
Property investment fell 10.3 per cent in the period, worsening from a slump of 10.1 per cent in the first nine months, suggesting still subdued confidence among developers despite an initial recovery in housing sales. Home-price declines abated for a second month
