CHINA’S retail sales grew slower than expected last month with consumers cautious as domestic coronavirus cases rose, official data showed today, but industrial output picked up after power shortages eased.

A rebound in the world’s second-biggest economy has been losing steam, with indicators muted last month, after the country made a swift coronavirus recovery helped by strict border controls and targeted lockdowns.

Economists said a recent domestic flare-up, where virus infections hit 21 provinces and regions, likely led to more cautious consumer behaviour as containment measures kicked in, while a property market slump worsened.

Retail sales rose 3.9% on-year, the National Bureau of Statistics (NBS) said, below expectations and markedly slower than October’s 4.9%.

“The international environment has become more complex and severe, and there are still many constraints on domestic economic recovery,” NBS spokesman Fu Linghui told reporters.

Economists Sheana Yue and Mark Williams of Capital Economics said in a research note that the pandemic “remained the key reason holding back a full recovery”, causing “weakness in the labour market.” 

The urban unemployment rate ticked up to 5% last month, from 4.9%.

Williams had said earlier that passenger traffic data pointed to consumer caution, while there were other “downbeat signals” such as slowing growth in sales during the annual November 1-11 shopping festival – China’s answer to the US Black Friday consumer spree.

But industrial production grew 3.8% on-year last month, in line with expectations of a pick-up.

This came as disruptions from power shortages eased.

Outages in recent months linked to emission reduction targets, the surging price of coal, and supply shortages had hit some factory production.

“Even though power supply shortages have eased recently, elevated input prices will linger… and sluggish domestic demand could be a longer-term drag,” Moody’s Analytics warned on Monday.

Fixed-asset investment growth slowed to 5.2% in the first 11 months, with property investment rising 6% – down from the January-October period – with falling home sales and tight financing rules.

“Wage arrears in property-related sectors, especially the construction sector, could also weigh on consumption,” said Lu Ting, chief China economist at Nomura.

The Chinese property sector has been thrown into uncertainty as major developers such as the giant Evergrande Group struggle to dig out of crushing debt burdens. – AFP, December 15, 2021.