Mixed China’s economic data in November signal that more stimulus is needed

China’s new home prices declined for the fifth consecutive month in November. Property investment also saw a significant drop of 9.4% in the January-November period, reflecting negative home buyer sentiment and challenges faced by indebted developers. The struggling property sector has been a persistent issue.

Despite faster-than-expected growth in the third quarter, China’s overall post-COVID economic recovery has been challenging.

Distress in the housing market, local government debt risks, and weakening global demand have slowed momentum.
The need for additional support measures is highlighted as various parts of the economy show different speeds of recovery.

On a positive note, industrial production grew by 6.6% in November, surpassing expectations and marking the strongest growth since September 2022.
This increase was driven by faster growth in automobile production and power generation.

Retail sales rose by 10.1% in November, accelerating from the previous month, but it fell short of analysts’ expectations for a 12.5% expansion.
Consumer prices fell at the fastest rate in three years, indicating deflationary pressures, while factory deflation deepened.

However, economists remain cautious despite the positive industrial production and retail sales figures.
Concerns include deepening factory-gate deflation, the sustainability of certain growth factors, and the view that a full-blown economic recovery may still be some distance away.

While exports grew for the first time in six months, imports extended declines. Analysts attribute the growth in exports to manufacturers offering unsustainable discounts, highlighting challenges in global trade dynamics.

Overall, the economic data from November suggests a complex and challenging environment for China’s economy. Positive signs in industrial production continue to face headwinds from ongoing issues in the real estate sector, challenges in domestic demand, and concerns about sustained economic recovery which may increase pressure on policymakers to implement further stimulus measures to address these challenges.