Weak consumption in China weighs on economy as Trump threatens to impose tariffs By Reuters

Written by Kevin Yao and Ethan Wang

BEIJING (Reuters) – Chinese industrial output growth accelerated slightly in November, while retail sales disappointed, keeping pressure on Beijing to ramp up stimulus for a fragile economy as it braces for more U.S. trade tariffs under a second Trump administration.

The mixed data set highlights the challenges facing Chinese leaders heading into 2025 when trade relations with the United States may deteriorate while domestic consumption also remains weak.

“The Chinese economy appears to have slowed last month, despite headwinds from recent policy easing,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

“But we doubt that the stimulus can achieve anything more than a short-term improvement, not least because the current strength of export demand is unlikely to continue once President Trump begins to implement some of his tariff threats.”

Data from the National Bureau of Statistics showed on Monday that China’s industrial output grew by 5.4% in November on an annual basis, up from a pace of 5.3% in October, exceeding expectations for a 5.3% increase in a Reuters poll.

However, retail sales, a measure of consumption, rose just 3.3% last month, much slower than the 4.8% rise in October. Analysts had expected an expansion of 4.6%.

The weaker retail numbers come despite a boost from major online shopping promotions and government-backed trade-in programs that have boosted sales in sectors including automobiles.

Investment in fixed assets also increased at a slower pace of 3.3% in the January-November period compared to the same period of the previous year, compared to an expected rise of 3.4%. It grew by 3.4% from January to October.

Bureau spokesman Fu Linghui said at a press conference that the trend of recovery in consumption has not changed and that more efforts will be needed to ensure that the economic recovery continues until 2025.

At last week’s Central Economic Work Conference, a closely watched meeting to set the agenda, China’s top leaders pledged to raise the budget deficit, issue more debt, and make boosting consumption a top priority.

The comments reiterated commitments made at a meeting of senior Communist Party officials, the Politburo, earlier this month, which backed an “appropriately loose” monetary policy in the first softening of its stance in 14 years.

Policymakers continue to struggle with the real estate crisis that has been going on for years and is affecting consumer confidence and the economy in general, as about 70% of household savings are concentrated in real estate.

There were some encouraging signs about new home prices in China, which fell at the slowest pace in 17 months in November.

Officials in recent months have redoubled their efforts to encourage homebuying, including lower mortgage rates and minimum down payment ratios, as well as tax incentives to lower the cost of housing transactions.

However, most analysts say a definite recovery in the real estate sector appears to be a long way off.

Reuters reported that policy advisers recommended that Beijing maintain its growth target at around 5.0% for next year, with a government economist saying China could offset the impact of expected US tariffs on its exports by further boosting domestic demand.

Trump, who is set to begin his second term as US president in January, has threatened to impose tariffs of more than 60% on imports of Chinese goods.

Reuters also reported last week that China was considering allowing the yuan to fall in response to punitive trade measures, but a readout from state media Xinhua after the Committee for the Prohibition of Chemical Weapons reiterated its commitment to maintaining the fundamental stability of the yuan.

A recent Reuters poll expected China to grow by 4.5% next year, with new US tariffs potentially reducing growth by up to one point.