China's Slowing Economy in November Adds Pressure for Reforms
By Reuters | 14 Dec, 2025

Slowing growth in China's export-oriented economy increases calls for deeper reforms to encourage more domestic consumer consumption.

China's factory output and retail sales grew at their weakest pace in over a year in November, compounding challenges for policymakers who are struggling to find fresh ways to keep the $19 trillion economy humming.

With Beijing's consumer trade-in subsidies fading, a drawn-out property crisis and industrial investment risking further deflation, officials have leaned on exports to support growth.

That strategy now looks increasingly unsustainable as trading partners around the world bristle at China's $1 trillion trade surplus and look to erect import barriers.

Industrial output rose 4.8% year-on-year, National Bureau of Statistics (NBS) data showed on Monday, the weakest pace since August 2024, slowing from 4.9% in October. It missed a 5.0% increase forecast in a Reuters poll.

Retail sales, a gauge of consumption, grew 1.3%, their weakest pace since December 2022 when China rapidly dismantled its strict zero-COVID regime, below 2.9% in October and forecasts for a 2.8% gain.

"Strong exports limited the need to turbocharge domestic demand this year, and the trade-in subsidies have started to run out," said Xu Tianchen, senior economist at the Economist Intelligence Unit.

"I think policymakers have turned their attention to 2026, since the around 5% growth target seems within reach for this year, so there's little additional motivation for further stimulus."

BEIJING STRUGGLING FOR FRESH IDEAS

Economists say the economy has passed the point at which further stimulus would provide an effective fix.

The International Monetary Fund last week urged Beijing to speed up structural reform and take action over the property sector, with some 70% of Chinese household wealth tied up in real estate.

China's new home prices fell further in November, alongside declines in property investment and home sales.

In a sign of further strain, annual car sales slumped 8.5%, the steepest decline in 10 months, dimming hopes of a year-end rebound in an industry that typically sees strong sales in the final two months of a year.

"The economy slowed across the board in November, and weak retail sales were particularly noteworthy," said Zhang Zhiwei, chief economist at Pinpoint Asset Management. "The recent contraction in investment and the continued decline in the property market have been transmitted to consumer confidence."

Even the Singles' Day shopping festival - which stretched to five weeks this year - failed to excite consumers.

Fixed asset investment shrank 2.6% in January-November compared with the same period last year, after a 1.7% decline in January-October. Economists expected a 2.3% drop.

GROWING TRADE HEADWINDS

Government advisers and analysts say China is likely to pursue its current annual growth target of around 5% next year, as it seeks to kick-start a new five-year plan on a strong footing.

But that could prove challenging, with both the World Bank and the IMF offering more conservative outlooks for China's growth trajectory. 

At a key economic meeting last week outlining next year's policy agenda, Chinese leaders promised to maintain a "proactive" fiscal policy to spur consumption and investment, while acknowledging a "prominent" contradiction between strong domestic supply and weak demand.

Yet the dual focus on consumption and investment cements concerns that Beijing is not yet ready to ditch a production-driven economic model in favour of one that leans more on household spending.

World leaders look to be lining up to put the brakes on China's exports.

French President Emmanuel Macron threatened Beijing with tariffs during his visit to China and called on the country to correct "unsustainable" global trade imbalances.

Mexico last week approved tariff hikes of up to 50% next year on imports from China and several other Asian countries, aiming to bolster local industry.

"China's economic development still faces numerous longstanding and emerging challenges," the official summary of the Central Economic Work Conference said. 

"We must strengthen internal capabilities to cope with external challenges."

(Reporting by Beijing Newsroom; Editing by Sam Holmes)