China's factory output, retail sales weaken in November

BEIJING — China’s factory output and retail sales growth slowed further in November, underscoring weak domestic demand and adding pressure on policymakers to rebalance the world’s second-largest economy as trading partners grow increasingly concerned about its massive trade surplus.

Industrial output rose 4.8% year over year in November, data from the National Bureau of Statistics (NBS) showed on Monday. That marked a slight slowdown from October’s 4.9% increase and missed the 5.0% growth forecast in a Reuters poll.

Retail sales, a key measure of consumer spending, grew just 1.3%, sharply down from a 2.9% increase in October and well below expectations for a 2.8% gain.

Signs of fragile consumer demand continue to mount. Annual car sales plunged 8.5% in November, the steepest decline in 10 months, dampening hopes for a year-end rebound in an industry that typically sees strong sales in the final two months of the year.

Even the Singles’ Day shopping festival, which major e-commerce platforms extended to five weeks this year to boost purchases, failed to generate strong momentum among consumers.

Fixed-asset investment fell 1.3% in the January-to-November period from a year earlier, following a 1.7% decline in the January-to-October period. Economists had expected a steeper 2.3% contraction.

Government advisers and analysts say China is likely to maintain its annual growth target of around 5% next year as it seeks to launch a new five-year plan from a position of strength. However, achieving that goal may prove difficult, with both the World Bank and the International Monetary Fund offering more cautious outlooks for China’s growth trajectory.

Much of the concern stems from the country’s prolonged property downturn, which has eroded household wealth and weighed heavily on consumers’ willingness to spend. A resolution appears distant, with home prices expected to continue falling through 2026 before stabilizing in 2027, according to a Reuters survey.

At a key economic meeting last week outlining policy priorities for the coming year, Chinese leaders pledged to maintain a “proactive” fiscal policy to support consumption and investment, while acknowledging a “prominent” imbalance between strong domestic supply and weak demand.

Still, the emphasis on both consumption and investment has reinforced concerns that Beijing remains reluctant to move away from its production-driven growth model toward one more reliant on household spending.

Top officials remain confident of meeting this year’s growth target, supported by resilient exports that have exceeded expectations despite higher U.S. tariffs. That strength, however, faces increasing scrutiny as China’s trillion-dollar trade surplus fuels tensions with Europe and other trading partners.

During a recent visit to China, French President Emmanuel Macron warned Beijing of possible tariffs and urged it to address what he described as “unsustainable” global trade imbalances. Mexico also approved tariff increases of up to 50% next year on imports from China and several other Asian countries, aiming to protect domestic industries.

“China’s economic development still faces numerous longstanding and emerging challenges,” an official summary of the Central Economic Work Conference said. “We must strengthen internal capabilities to respond to external challenges.” -Reporting by Beijing Newsroom; Editing by Sam Holmes/Reuters