1. Retail sales ‘hold up well’
“While retail sales have shown strong year-on-year growth, this increase is primarily due to a low-base effect. When considering month-on-month growth, after eliminating seasonal factors, there has been a mild contraction,” said Yue Su, principal economist for China at The Economist Intelligence Unit.
2. Property investment remains biggest drag
Property investment in China fell by 9.4 per cent in the first 11 months of 2023 compared with a year earlier, with analysts at Capital Economics saying “property investment eased slightly” without elaboration.
“While markets may have become somewhat desensitised by constant discussions related to the property sector, it remains the single largest drag affecting China’s economy, especially as cash-strapped and insolvent developers have left a vast number of homes unfinished,” said analysts at Nomura.
3. Fixed-asset investments hold steady
Fixed-asset investments in China expanded by 2.9 in the first 11 months, year on year, unchanged from the growth seen in the January-October period, though analysts at Nomura said the reading again missed market expectations mainly due to a low base.
China’s economic struggles continue as property, private investment drag
China’s economic struggles continue as property, private investment drag
Analysts at Capital Economics said the year-to-date growth holding steady in the first 11 months of the year implied an acceleration in monthly year-on-year growth from 1.4 to 2.9 per cent, with growth also picking up in seasonally adjusted terms.
Private investment, meanwhile, declined by 0.5 per cent in the first 11 months of the year, compared with a year earlier.
4. Industrial production provides strength in November
China’s industrial output rose by 6.6 per cent in November, compared with 4.6 per cent growth in October, and analysts at Capital Economics said this was the “main bright spot” in November’s data release, thanks to the strength in exports.
“Much of the strength in November came from industrial production. Growth beat expectations,” they said.
Sustained export growth in ‘doubt’: 5 takeaways from China’s trade data
Sustained export growth in ‘doubt’: 5 takeaways from China’s trade data
They added that, after adjusting for seasonality, output in November expanded at the fastest clip in 18 months.
Analysts at Nomura said the higher year-on-year growth, which they said was broad-based, was mainly driven by a low base.
5. Urban unemployment rate remains stable
China’s urban surveyed unemployment rate stood at 5 per cent in November, year on year, unchanged from October.
Analysts at Capital Economics said, in seasonally adjusted terms, the urban unemployment rate edged and remains well below the 5.6 per cent it averaged last year.
They also said hours worked rose last month.
6. China’s recovery continues to make headway
Analysts at Capital Economics said the data released on Friday suggested that “the recovery continued to make headway” in November.
“This partly reflects the step-up in policy support, which looks set to remain flowing, going into 2024,” they said.
“The November data indicates a continuing steady recovery in China’s economy, driven by government-driven investment and a gradual stabilisation of external demand,” said Yue at The Economist Intelligence Unit.
Nevertheless, the economy will be on firmer footing than it was in 2023
Yue expects China’s real gross domestic product growth to slow by 0.6 percentage points to 4.9 per cent in 2024.
“Nevertheless, the economy will be on firmer footing than it was in 2023,” Yue said. “Moves by the government to extend home-buying easing in Beijing and Shanghai will help, but a weak labour market and income expectations will serve as a drag” on a strong economic recovery.
The property market remains the single-largest drag affecting China’s economy, according to analysts at Nomura, who said it may contribute to another economic dip in the first half of 2024.
