China's consumption recovery has shown resilience despite a broader economic slowdown. The National Bureau of Statistics (NBS) reported that retail sales growth in November 2024 slowed to 3% year-on-year, marking the weakest pace in three months. This deceleration is surprising given the strong sales of home appliances and cars earlier in the year, which were bolstered by government subsidies. However, sales of discretionary goods such as cosmetics, alcohol, clothing, and jewelry have seen significant declines.The mixed economic performance in November highlights the challenges in maintaining robust consumer spending. Despite the slowdown in retail sales, there are positive signs in the property market. Home sales grew year-on-year for the first time since the economy reopened from COVID-19 lockdowns in early 2023, and price declines have eased for the third consecutive month.
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The government has been attempting to stimulate consumption through various measures, including reducing interest rates and lifting purchase restrictions in the real estate sector. However, these efforts have yet to produce a significant and lasting improvement in the overall consumption market. Consumer confidence remains low, and households are exhibiting frugality in their spending habits, prioritizing value for money and enjoyable experiences over luxury items.The broader economic context includes a slowdown in GDP growth, with projections for 2024 set at around 4.8%. This figure aligns with the government's target of about 5% annual growth, although the actual performance has been somewhat below expectations. The economy's reliance on manufacturing and exports has helped sustain some momentum, but the supply-demand imbalance and the potential impact of new trade tariffs from the US pose significant challenges.In summary, while there are signs of a gradual recovery in domestic private consumption, the overall economic environment remains challenging. The government's focus on boosting consumption and the property market will be crucial in overcoming the current economic headwinds and fostering a more balanced and sustainable growth trajectory.
