China’s retail sales growth plunged to a 0.3% year-on-year increase in November, marking the weakest performance outside the pandemic era. The sharp slowdown fuels fears of persistent domestic demand weakness and global economic spillovers.
- Retail sales rose just 0.3% year-on-year in November, the weakest since early 2020
- Consumer goods and automotive sales declined in nominal terms
- CNY weakened to 7.32; CNH fell to 7.34 amid risk-off sentiment
- CSI 300 and SHCOMP indices dropped, led by consumer and auto stocks
- Demand for industrial metals like steel and aluminum declined
- BRL and AUD showed signs of pressure due to weaker export outlook
China’s retail sales growth in November hit a 0.3% year-on-year increase, the weakest reading since early 2020, excluding pandemic-related disruptions. The data, released amid broader economic indicators signaling stagnation, underscores deepening weakness in consumer spending across key sectors including consumer goods and automotive. Despite government stimulus measures, demand remains subdued, with real income growth failing to keep pace with inflation, particularly in rural areas and among younger demographics. The decline reflects a broader structural challenge: a shift from investment- and export-led growth to a more consumption-driven model, which has stalled. Industrial metals linked to construction and manufacturing—such as steel and aluminum—saw immediate price pressures as factory output and infrastructure activity showed mixed signals. The CSI 300 and SHCOMP indices both fell, with consumer and auto-related stocks underperforming, while the CNY weakened to 7.32 per USD and CNH dipped to 7.34, reflecting risk aversion in currency markets. Regional currencies like the BRL and AUD also faced downward pressure, as investors reassessed commodity demand outlooks. China accounts for roughly 40% of global demand for industrial metals and over 30% of global consumer goods imports. The latest retail data raises the likelihood of further stimulus, including potential cuts in reserve requirement ratios or targeted fiscal packages, though market confidence remains fragile. The situation heightens risks for export-dependent economies and commodity exporters in Latin America and Southeast Asia.