China Growth Weakens as Retail Sales and Investment Miss Forecasts, Raising Stimulus Expectations
China’s economic growth weakened in November as retail sales slowed and investment declined, signaling weak domestic demand despite steady factory output. Analysts now expect fresh stimulus from Beijing.
China’s economy showed significant weakness in November 2025, with retail sales hitting multi-year lows (1.3% growth) and fixed-asset investment declining further (-2.6% YTD), missing forecasts and highlighting persistent weak domestic demand, while industrial output (4.8%) also dipped, intensifying calls for stronger government stimulus to counter sluggish consumer spending and a struggling property market, despite strong exports.
China’s economic recovery has shown fresh signs of strain, as new data reveals that growth weakened in November, with retail sales expanding at their slowest pace since the pandemic and investment activity declining, missing market expectations.
The slowdown highlights persistent weaknesses in domestic demand and is intensifying calls for additional government stimulus to support the world’s second-largest economy.
According to recent economic indicators, Chinese consumers remain cautious, curbing spending amid uncertainty surrounding employment, the property sector, and future income prospects.
While factory output remained relatively stable, it was not enough to offset the drag caused by weak consumption and falling investment, underscoring structural challenges facing China’s post-pandemic recovery.
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Retail Sales Signal Fragile Consumer Confidence
Retail sales growth , a key measure of consumer demand expanded at a significantly slower rate in November, falling short of economists’ forecasts. This marks the weakest retail performance since COVID-19 disruptions, signaling that households continue to prioritize savings over discretionary spending.
Analysts attribute subdued consumption to several factors, including:
Soft labor market conditions
Falling property prices
Low consumer confidence
High household debt levels
Despite targeted policy measures aimed at boosting spending, such as consumption vouchers and support for electric vehicle purchases, domestic demand remains fragile, raising concerns about the sustainability of China’s growth momentum.
Investment Declines as Property Sector Struggles Persist
Fixed-asset investment also disappointed, registering a decline that reflects continued stress in China’s real estate sector, long considered a pillar of economic growth. Property developers remain under financial pressure, with subdued housing sales and ongoing debt restructuring weighing on new construction activity.
Infrastructure investment has provided some support, but not enough to counterbalance weakness in real estate and private sector investment.
Economists warn that without stronger confidence among private businesses, capital expenditure is unlikely to rebound meaningfully.
Industrial Output Offers Limited Relief
In contrast, factory output showed relative resilience, supported by manufacturing and export-oriented industries. However, analysts caution that external demand faces risks amid global economic uncertainty, geopolitical tensions, and slowing growth in key markets such as Europe and the United States.
While industrial production has helped prevent a sharper slowdown, experts note that China cannot rely solely on manufacturing and exports to drive growth in the long term, especially as global demand softens.
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Policy Response and Stimulus Expectations Grow
The latest data has strengthened expectations that Beijing may introduce additional stimulus measures in the coming months. Potential policy actions include:
Further interest rate cuts
Increased liquidity support for banks
Expanded fiscal spending on infrastructure
Additional support for the property market
Measures to boost household consumption
Chinese policymakers have repeatedly emphasized the need to stabilize growth and support domestic demand, but have so far taken a cautious approach to large-scale stimulus, focusing instead on targeted interventions.
Economists believe a more coordinated policy response may be necessary to restore confidence and prevent growth from slipping further below official targets.
Global Implications of China’s Economic Slowdown
China’s economic performance has significant global implications. As the world’s second-largest economy and a major consumer of commodities, slower Chinese growth could impact global trade, commodity prices, and emerging markets.
Countries reliant on Chinese demand for exports including raw materials, energy, and manufactured goods may feel the effects if domestic demand in China remains weak. Financial markets are also closely watching Beijing’s next policy moves for signals on future growth prospects.
Outlook: Recovery Remains Uneven
Looking ahead, analysts expect China’s recovery to remain uneven and policy-dependent. While industrial output and infrastructure spending may offer short-term support, a sustained rebound will likely require:
Stronger consumer confidence
Stabilization of the property sector
Improved private sector sentiment
Until these issues are addressed, China’s growth trajectory is expected to remain under pressure, keeping policymakers on alert and markets focused on the timing and scale of future stimulus.
Team: Hindustan Digest
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