BEIJING (Realist English). China’s economic slowdown became more entrenched in November, with retail sales posting their weakest year-on-year growth since 2022 and investment contracting more sharply, underscoring the difficulty policymakers face in pivoting the economy toward domestic demand.
All major domestic indicators disappointed during the month, highlighting the challenge of making household consumption — rather than exports and investment — the main engine of growth from 2026. According to ING, recent signals from the Politburo and the Central Economic Work Conference indicate that boosting domestic demand will be a top policy priority in the coming years, alongside measures aimed at raising household incomes.
Retail sales growth slowed to 1.3% year-on-year in November, down from 2.9% in October. ING attributed much of the deceleration to the fading impact of China’s trade-in subsidy programme, which initially encouraged consumers to replace older goods but failed to generate lasting demand.
As the effect of the programme waned, sales of household appliances plunged 19.4% compared with a year earlier, weighing heavily on overall retail performance. China’s transition toward electric vehicles also distorted consumption data: petrol sales fell 8% year-on-year, while earlier car purchases contributed to an 8.3% decline in auto sales.
Some segments — including catering, cosmetics, food staples, and gold and jewellery — continued to perform relatively well, but these gains were insufficient to offset broader weakness in consumer spending.
Investment trends were similarly weak. Fixed asset investment, covering infrastructure, manufacturing and property, contracted more sharply in November, with both public and private investment declining. Private investment fell faster, raising concerns about underlying business confidence.
The property sector remains one of the biggest drags on the economy. Home prices across China’s 70 major cities continued to fall in November, with second-hand home prices declining faster than new-home prices. From their peaks, new-home prices are down more than 12%, while existing-home prices have fallen by over 20%, directly undermining household wealth and confidence.
Property investment also remained in steep decline, reinforcing doubts that the housing downturn — which began in 2021 after tighter borrowing limits for developers — has been resolved. While authorities have signalled renewed efforts to stabilise the sector, including support for affordable housing and measures to absorb excess supply, the prospects for a sustained turnaround remain uncertain.
Industrial production stood out as a relative bright spot. Output growth eased slightly to 4.8% year-on-year in November but remained resilient, supported by strong performance in sectors such as rail equipment, shipbuilding, aerospace, autos, industrial robots and semiconductors. External demand has helped sustain factory activity even as domestic demand falters.
Analysts, however, warn that this support may face risks ahead. Rising trade tensions and tariff uncertainty could weigh on exports in 2026, while weak property prices continue to constrain consumer confidence.
Taken together, November’s data points to a broad-based and deeply rooted slowdown. While China’s growth targets for this year remain within reach, the transition to a consumption-led growth model is likely to remain difficult and uncertain.