China retail sales surge in October but economy remains sluggish

Chinese retail sales grew in October at the fastest rate in five months, data showed Wednesday, boosted by an extended holiday at the start of the month, though other indicators pointed to still-sluggish demand in the world’s number-two economy.

The country slipped back into deflation last month, while exports continued to fall, highlighting the challenge for officials grappling with weak domestic consumption and a faltering recovery since Beijing abolished strict zero-Covid curbs in late 2022.

Retail sales jumped 7.6 percent on-year in October, according to the National Bureau of Statistics, up from September’s 5.5 percent and the highest growth since May.

However, Zhiwei Zhang, chief economist at Pinpoint Asset Management, wrote in a note that the big figure was “partly due to lower base last year”.

Food and beverage sales in particular spiked in October, growing 17.1 percent on year, as a longer-than-usual eight-day national holiday at the start of the month drew crowds to restaurants, in contrast to the nationwide Covid curbs and business shutdowns that marked the same period last year.

Meanwhile, industrial production growth in October crept up to 4.6 percent from September’s 4.5 percent, while urban unemployment stayed flat at 5.0 percent.

Unemployment data no longer includes a breakdown for 16- to 24-year-olds, after it hit a record high in June of 21.3 percent.

After a tough year for the world’s number-two economy, there have been flickers of life in recent weeks, with third-quarter growth coming in more than expected.

A string of below-par economic data in the first half — which came despite the lifting of zero-Covid curbs at the end of 2022 — led the government to unveil a number of targeted stimulus measures aimed at supporting key sectors, particularly the troubled property industry.

“Domestic demand is still weak,” Zhang said, adding though that “both monetary and fiscal policies are turning more supportive, which hopefully will help to boost domestic demand in 2024.” (BSS/AFP)