From Bloomberg, November 14/15:
- Retail sales beat forecasts with fastest growth since February
- Trump threat calls for more focus on spurring domestic demand
China entered the fourth quarter with a more balanced economy as consumption growth nearly caught up to factory output, in an upswing that now depends on how much more stimulus Beijing may deploy in the event of a tariff shock when Donald Trump returns to the White House in 2025.
Retail sales expanded at the fastest in eight months in October, according to figures published by the National Bureau of Statistics on Friday, exceeding the forecasts of all 29 economists surveyed by Bloomberg. Industrial production increased at a slightly slower pace from the previous month but hovered above a level critical to achieving the government’s 2024 growth target of around 5%.
The strength in consumption is encouraging after a lopsided recovery in China in which household spending trailed production, held back by sluggish sentiment among shoppers and the private sector. Boosting domestic demand could become even more pressing after last week’s reelection of Trump as US president, given his threat of a 60% tariff on most Chinese imports risks wreaking havoc on the Asian country’s export sector.
“There are preliminary signs that policies are intended at rebalancing the economy and its growth model,” said Jacqueline Rong, chief China economist at BNP Paribas SA. “Whether the mild recovery can continue next year depends on what additional policies will be rolled out. We think further policy support is needed to maintain the momentum of growth in 2025.”
China’s benchmark CSI 300 Index of onshore stocks briefly erased losses in morning trading after the data release, before closing1.8% lower on Friday as concerns over a deepening rift with the US outweighed signs of economic stabilization. Chinese shares in Hong Kong were up 0.2% as of 3:30 p.m. local time after falling 0.6% earlier.
The snapshot of China’s economy for October offered other indications of easing pressures.
Declines in home prices abated, although it takes time for property inventory to be digested and developer confidence to recover enough to invest in new projects. Infrastructure investment was steady and the urban jobless rate fell to the lowest since June.
“In light of a potential Trump shock, China has no choice but to boost domestic spending,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd.
While a single month’s data are insufficient to confirm a firm rebalancing toward consumption, “unlocking household savings is certainly the only way out going forward,” he said...
....MUCH MORE
Monday morning the CSI 300 was up 1.08%. Over the last month the index is up 6.12% but has been choppy the last couple weeks:
