Retail sales grew by 6.4% last month, marking the quickest pace since December 2023 and surpassing all forecasts, according to official data released on Monday. This growth helped counterbalance a slowdown in industrial output expansion, which rose by 5.8%, falling short of analysts’ median estimates in a Bloomberg survey.
The latest economic data offers a comprehensive view of how China managed the disruptions caused by US President Donald Trump’s trade conflict. A temporary tariff truce between Beijing and Washington in mid-May provided relief to Chinese exports that were facing potential duties of up to 145% from the US.
The unexpectedly robust consumption may provide some comfort to policymakers. The economy is grappling with a long-standing property crisis, deflationary pressures, and concerns about unemployment, all of which undermine household confidence.
Major online shopping platforms like JD.com kicked off their annual 618 shopping festival earlier this year, likely boosting retail sales. Discounts on these platforms began around mid-May this year, in contrast to the end of the month in 2024.
The government, which has set an ambitious economic growth target of approximately 5% for 2025, has prioritized enhancing domestic consumption this year.
Nevertheless, the economy’s relative resilience so far this year may afford the government additional time before it needs to implement further measures to stimulate growth. China’s four-month budget deficit has reached an all-time high, prompting a stimulus push in May alongside the central bank’s reductions in both the policy rate and the reserve requirement ratio.
The urban unemployment rate stood at 5% in May, while fixed-asset investment growth was recorded at 3.7% for the first five months of the year. New home prices in China fell by 0.22% in May compared to the previous month, marking the steepest decline since October.
The government has expedited its bond sales this year, providing early support for funding infrastructure projects.
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