China’s retail sales growth slowed to 3.2% year-on-year in November, reflecting persistent household caution, prompting authorities to deploy digital yuan incentives. Early results show limited impact, underscoring deeper structural challenges in consumer confidence.
- Retail sales growth slowed to 3.2% yoy in November, the weakest since January 2023
- Digital yuan incentive programs were rolled out in 15 cities, targeting low-income households and small retailers
- Initial data shows only a 1.8% increase in digital yuan transaction volume during the pilot period
- The Shanghai Composite (000001.SS) fell 1.4% in December, while the Hang Seng Index (HSI) dropped 2.1% amid concern over consumer-driven GDP growth
- CNY=X weakened to 7.28 per USD, reflecting market skepticism over stimulus effectiveness
- Financial sector stocks, particularly consumer finance firms, underperformed with a 3.6% decline in the first two weeks of December
China’s efforts to reignite domestic consumption are facing headwinds as November’s retail sales rose just 3.2% year-on-year, below expectations and marking the weakest pace since early 2023. The figure, the lowest since January, highlights ongoing reluctance among households to spend despite government-backed measures. The decline was broad-based, with consumer staples and non-essential durables showing particularly weak performance, signaling a deepening caution among urban households amid stagnant wages and high youth unemployment.