---
title: "China’s economy shows green shoots as consumption growth jumps"
description: "China’s economy showed encouraging signs as retail sales grew at the strongest pace in eight months, indicating Beijing’s latest round of stimulus has boosted some key sectors."
type: "NewsArticle"
publisher: "Daily Maverick"
site: "https://www.dailymaverick.co.za"
section: "Business Maverick"
author: "Bloomberg"
author_url: "https://www.dailymaverick.co.za/author/bloomberg/"
canonical_url: "https://www.dailymaverick.co.za/article/2024-11-15-chinas-economy-shows-green-shoots-as-consumption-growth-jumps/"
published: "2024-11-15T05:40:11"
updated: "2024-11-15T05:40:14"
lang: "en-ZA"
word_count: 643
---

# China’s economy shows green shoots as consumption growth jumps

> China’s economy showed encouraging signs as retail sales grew at the strongest pace in eight months, indicating Beijing’s latest round of stimulus has boosted some key sectors.

By Bloomberg · Published 15 November 2024, 07:40 SAST · Updated 15 November 2024, 07:40 SAST

## Key points
- In a surprising twist of economic fate, China's retail sales soared by 4.8% in October, outpacing all expectations and hinting that the nation's consumers might finally be shaking off the pandemic blues, while industrial output took a more leisurely stroll at 5.3%, leaving policymakers to ponder whether the two-speed economy is still stuck at the traffic lights.
- Retail sales in China surged 4.8% in October, marking the strongest growth since February and surpassing economists' expectations.
- Industrial output rose 5.3%, slightly below forecasts, indicating mixed signals in the manufacturing sector.
- Policymakers are prioritizing consumer spending over factory activity, reflecting a shift in economic strategy amid a slowing economy.
- Despite positive retail trends, challenges remain, including weak domestic demand and potential external pressures from US trade policies.

## Content

Retail sales increased 4.8% in October from a year earlier, the National Bureau of Statistics said on Friday, up from September’s gain of 3.2%. The reading exceeded the most bullish of estimates by economists in a Bloomberg survey and marked the strongest growth since February.

Industrial output rose 5.3%, slightly slower than the previous month and lower than a forecast growth of 5.6%.

The strength in retail spending represents improvement in a part of the economy that has struggled with sluggish sentiment and trailed growth in production, which has long benefited from Beijing’s manufacturing-focused policy support.

“The policymakers will be pleased to see the rally in retail sales. They’d rather sacrifice a bit of factory activity for consumption, although it is still early to tell whether the two-speed economy has ended,” said Raymond Yeung, chief economist for Greater China at Australia & New Zealand Banking Group Ltd.

China’s benchmark CSI 300 Index of onshore stocks lost as much as 0.9% before paring and traded 0.2% higher after the data release. Chinese shares trading in Hong Kong were up 1% as of 10:27am local time after falling 0.6% earlier.

The indicators captured the immediate effects of China’s boldest stimulus measures since the pandemic that aimed to ensure the country reaches its annual growth target of around 5%. Beijing has also sought to spur consumer spending by subsidising purchases of equipment, appliances and cars in a program announced earlier this year and ramped up in the last few months.

A slowdown of economic expansion in the last quarter to the weakest since early 2023 has prompted policymakers to [deliver](https://www.bloomberg.com/news/articles/2024-09-27/xi-s-big-stimulus-week-aims-to-draw-a-line-under-china-slowdown) out-sized interest-rate cuts and support for the property and stock markets. Authorities also rolled out a $1.4 trillion debt swap [programme](https://www.bloomberg.com/news/articles/2024-11-08/china-unveils-839-billion-debt-swap-to-rescue-local-governments) to curb debt risks faced by local authorities and free up fiscal room for them to promote growth.

“With the accelerated implementation of the existing policies and the introduction of a raft of incremental policies in October, the national economy showed a stable growth trend with major indicators recovering notably and positive factors accumulated,” according to a statement from the NBS.

“However, we should be aware that the external environment is increasingly complicated and severe, effective demands are still weak at home and the foundation for continuous economic recovery needs to be strengthened,” the NBS added.

The question now is how far Beijing is willing to go to shore up domestic demand and tackle deflation. Boosting consumption could become even more pressing after the reelection of Donald Trump as US president, as he has threatened a 60% tariff on most Chinese imports, a move likely to hurt the Asian country’s export sector.

Data released previously for October painted a mixed picture of the state of the world’s second-largest economy. [Sentiment](https://www.bloomberg.com/news/articles/2024-10-31/china-factory-activity-snaps-contraction-streak-on-stimulus-push) among manufacturers and service providers improved and [export growth](https://www.bloomberg.com/news/articles/2024-11-07/china-export-growth-powers-ahead-as-economy-gets-stimulus-boost) hit a two-year high. However, [inflation](https://www.bloomberg.com/news/articles/2024-11-09/china-price-growth-stays-near-zero-as-deflation-pressure-lingers) stayed near zero and [credit expansion](https://www.bloomberg.com/news/articles/2024-11-11/china-s-credit-expansion-slowed-more-than-expected-in-october) slowed more than expected, reflecting tepid domestic demand.

Finance Minister Lan Fo’an has promised “more forceful” fiscal policy next year, hinting at an increase in the budget deficit, an expansion in special local bond issuance and freer use of the funds raised. He also suggested greater support for the cash-for-clunkers program.

Governments at all levels accelerated bond sales in recent months, with net financing exceeding 1 trillion yuan ($138 billion) for three straight months through to October.

That has yet to show an effect on investment, though. Fixed-asset investment increased 3.4% in the first 10 months of the year from the same period in 2023, maintaining the same pace in January-September.

Property investment fell 10.3% in the period, worsening from a slump of 10.1% in the first nine months, suggesting still subdued confidence among developers despite an initial recovery in [housing sales](https://www.bloomberg.com/news/articles/2024-10-31/china-home-sales-slump-eases-as-stimulus-boosts-buyer-morale). China’s home-price declines [abated](https://www.bloomberg.com/news/articles/2024-11-15/china-home-prices-fall-at-slower-pace-after-stimulus-boost) for a second month in October, aided by the country’s recent policy support, data showed on Friday.