Industrial production expanded 4.8% year on year in November, according to data from the National Bureau of Statistics, marking the slowest pace in 15 months and falling short of market expectations. At the same time, retail sales grew just 1.3%, their weakest showing since December 2022, when China dismantled its strict “zero-COVID” regime. The sharp slowdown in consumption highlights the difficulty Beijing faces in nurturing new sources of growth as temporary support measures fade.
For much of this year, strong exports have helped offset domestic softness. Trade-in subsidies encouraged spending on big-ticket items, while overseas demand absorbed excess industrial capacity. But those supports are now waning. Subsidies are being scaled back, the property crisis continues to weigh heavily on household balance sheets, and deflationary pressures are creeping into parts of the industrial sector.
Relying on exports, however, is becoming increasingly risky. China’s roughly $1 trillion trade surplus has drawn growing scrutiny abroad, prompting governments to consider or impose new barriers. From Europe to Latin America, concerns about market distortions and overcapacity are translating into tougher trade stances that could narrow one of China’s few remaining bright spots.
Market reaction to the latest data was muted but negative, with Chinese equities pressured further by renewed worries in the real estate sector. China Vanke, one of the country’s largest developers, is seeking to avert a debt default after investors rejected a proposal to delay bond repayments—another reminder of the sector’s unresolved stress.
Economists increasingly argue that traditional stimulus tools are losing their effectiveness. The International Monetary Fund has urged Beijing to accelerate structural reforms and confront property-sector risks more directly, estimating that repairing the housing market could cost the equivalent of 5% of GDP over the next three years. With roughly 70% of household wealth tied to real estate, the drag on consumption is proving persistent.
Official commentary has acknowledged the problem. Fu Linghui, a spokesperson for China’s customs administration, said more must be done to rebuild consumer confidence, noting that fixed asset investment fell 2.6% in the first 11 months of the year, largely due to a steep drop in property investment. New home prices continued to decline in November, while developers struggle to clear unsold inventory even at discounted prices.
Weakness is also evident in other consumer-facing sectors. Car sales dropped 8.5% year on year, the sharpest fall in 10 months, dampening hopes for a customary year-end rebound. Even the extended Singles’ Day shopping festival failed to generate meaningful enthusiasm, reinforcing concerns that households remain cautious.
Looking ahead, government advisers say China is likely to maintain a growth target of around 5% next year as it prepares to launch a new five-year plan. Yet international institutions such as the World Bank and the IMF are more guarded in their outlooks, pointing to structural headwinds and limited policy room.
At a recent high-level economic meeting, Chinese leaders pledged a “proactive” fiscal stance to support consumption and investment, while acknowledging a widening gap between strong supply and weak demand. Still, the emphasis on boosting both production and investment suggests Beijing is not yet ready to pivot decisively toward a consumption-led model.
External pressures are mounting in parallel. France’s president has warned of tariffs if trade imbalances persist, while Mexico has approved tariff hikes of up to 50% on imports from China and other Asian economies. Should export channels narrow further, Chinese manufacturers may find it difficult to redirect output to a cautious domestic market.
Taken together, November’s data paint a picture of an economy losing momentum on multiple fronts. While targeted policy support could deliver a short-term lift, many analysts believe it will not be enough to prevent growth from remaining subdued well into 2026, as China grapples with the limits of its current economic model.