China’s November activity data reinforced a familiar imbalance: production is holding up better than household demand. Retail sales rose 1.3% year over year, slowing from 2.9% previously and missing the 2.8% consensus estimate, while industrial production grew 4.8%, slightly under the 5.0% forecast. Fixed-asset investment contracted 2.6% over January to November, pointing to a private-sector and property overhang that continues to suppress confidence.
The “why” is increasingly tied to the property downturn spilling into consumer sentiment. CNBC highlighted that real-estate investment fell 15.9% in the first 11 months, and price declines worsened across major cities, including a 1.2% drop in tier-1 new home prices in November. Another near-term drag came from autos: industry data showed auto retail volumes fell 8.1% to 2.23 million cars, partly as local governments paused some trade-in subsidies.
Beijing is signaling more support, but markets are waiting for size, timing, and transmission mechanisms. Reuters reported the Central Economic Work Conference promised a “proactive” fiscal stance, including measures to boost income and consumption, while acknowledging the contradiction of “strong supply” and “weak demand,” per the CEWC readout. Expectations in that report included a growth target near 5% and a deficit around 4% of GDP again next year. Separately, China’s finance ministry said it plans to issue ultra-long special government bonds to fund priorities including equipment upgrades and consumer goods trade-ins, according to a ministry statement.
The next steps hinge on whether policymakers prioritize household balance sheets over industrial upgrading. If fiscal support skews toward investment-heavy channels, consumption may stay soft even if headline GDP holds near target. Position for more policy headlines through Q1 and treat each stimulus announcement as a test of whether China is genuinely shifting toward demand-led growth.
