Dec 15, 2023: Chinese industrial production outperformed expectations in November, showcasing a year-on-year growth of 6.6%, as reported by the National Bureau of Statistics. This figure exceeded the anticipated 5.6% growth and marked an acceleration from the previous month’s 4.6% growth. The upswing was notably influenced by a low comparative base due to the COVID-era lockdowns that persisted in Chinese factories towards the end of 2022.
This stronger-than-expected reading hints at some resilience in output, offering a positive glimpse into the Chinese economy. However, the anticipated post-COVID economic resurgence failed to fully materialize this year, and recent data continues to underscore challenges.
While industrial production indicated stability, China faced disinflation in November, coupled with persistently feeble business activity. Despite Beijing’s continuous liquidity injections amounting to 1.45 trillion yuan ($200 billion) through its medium-term lending facility on Friday, local spending remained lackluster.
Retail sales growth of 10.1% year-on-year in November fell short of the expected 12.5%, suggesting ongoing weakness in consumer spending. Although retail sales have shown a steady climb from the previous year, discretionary spending notably declined as consumer confidence wavered concerning China’s economic outlook.
Amid cautious investor sentiment, fixed asset investment grew by 2.9%, missing the 3% anticipated mark. This hesitancy in substantial capital investments reflects concerns about the economic climate. Notably, foreign capital inflows into China have dwindled this year amid sluggish economic growth.
The sustained sluggishness in China’s economy has spurred calls for targeted fiscal measures from the government. The challenges within the property sector, amplified by prominent defaults, have added further hurdles.
Moody’s, a prominent ratings agency, recently revised its outlook on China to Negative, signaling a potential credit rating downgrade for the country due to these economic challenges.
