China’s factory output growth slowed to a 15-month low, while retail sales posted their worst performance since the country abruptly ended its draconian “zero-COVID” curbs, highlighting the urgent need for new growth drivers heading into 2026.
With Beijing’s consumer trade-in subsidies fading, a drawn-out property crisis weighing on household spending and industrial investment risking further deflation, officials have leaned on exports to support growth.
That strategy now looks increasingly unsustainable as trading partners around the world bristle at China’s $1 trillion trade surplus and look to erect import barriers.
Industrial output rose 4.8% year-on-year, National Bureau of Statistics (NBS) data showed on Monday, the weakest pace since August 2024, slowing from 4.9% in October. It missed a 5.0% increase forecast in a Reuters poll.
Retail sales, a gauge of consumption, grew 1.3%, their weakest pace since December 2022, when the world’s second-largest economy ended pandemic restrictions, well below 2.9% in October and forecasts for a 2.8% gain.
“Strong exports limited the need to turbocharge domestic demand this year, and the trade-in subsidies have started to run out,” said Xu Tianchen, senior economist at the Economist Intelligence Unit.
“I think policymakers have turned their attention to 2026, since the around 5% growth target seems within reach for this year, so there’s little additional motivation for further stimulus.”
The weak data weighed on Chinese stocks, which were also hit by fresh real estate worries as property developer China Vanke scrambled to avoid debt default.
BEIJING STRUGGLING FOR FRESH IDEAS
Economists say the economy has passed the point at which further stimulus would provide an effective fix.
The International Monetary Fund last week urged Beijing to speed up structural reform and take action over the property sector, with some 70% of Chinese household wealth tied up in real estate.
