Sluggish retail and yuan concerns amid China's production boost
Reuters reports that China's industrial production saw a slight acceleration in November, although retail sales fell short of expectations. This underperformance in retail sales occurred despite significant online shopping promotions and government-subsidised initiatives.
Industrial production in China grew 5.4% in November compared to the same period a year earlier, surpassing analysts' forecasts of a 5.3% growth.
Consumption falls short of expectations
Despite the increase in production, retail sales in China rose by only 3.3%, which did not meet analysts' expectations of a 4.6% growth. Even with numerous online shopping promotions and government support programmes, sales in the automotive sector and other industries did not achieve the anticipated results.
Investment in fixed assets increased by 3.3% from January to November, which was also below the forecasted growth of 3.4%.
Beijing's future plans
At the Central Economic Work Conference, Chinese leaders committed to increasing the budget deficit and debt issuance and prioritising consumer spending growth. These plans align with earlier commitments from the Communist Party's Politburo, which supported a more flexible monetary policy, reports Reuters.
Government advisors have recommended maintaining economic growth at 5% next year, necessitating decisive action in response to new trade tariffs from the USA. President Trump, who will begin his second term in January, announced tariffs exceeding 60% on Chinese goods.
The stability of the yuan in question
China is contemplating weakening the yuan in light of U.S. trade measures. However, state media Xinhua confirmed a commitment to maintaining currency stability following the CEWC conference. The Chinese GDP is projected to grow by 4.5% next year, but new tariffs could decrease this growth by as much as 1 percentage point.
