The Los Angeles Post
U.S. World Business Lifestyle
Today: March 19, 2025
Today: March 19, 2025

China retail sales pick up as Beijing turns to consumers to ease US trade pressure

Customers shop for bags at the Wankelai store in Beijing
March 17, 2025
Kevin Yao, Ellen Zhang - Reuters

By Kevin Yao and Ellen Zhang

BEIJING (Reuters) -China's retail sales growth quickened in January-February in a welcome sign for policymakers' efforts to boost domestic consumption even as joblessness rose and factory output eased, underscoring the strains on an economy facing fresh U.S. trade pressure.

Policymakers have put expanding domestic demand as the top priority this year as they try to cushion the impact of the Trump administration's tariffs on its crucial export engine.

China retail sales pick up as Beijing turns to consumers to ease US trade pressure
Engineers work on humanoid robots at an Agibot factory in Shanghai

China's top leaders have maintained an economic growth target of "around 5%" for 2025, but analysts say that may be a tall order given pressure on exports, tepid household demand and a protracted property crisis.

The data followed weaker-than-expected exports and inflation indicators earlier this month, highlighting the need for more policy support to foster a sustainable economic recovery.

"The risk to the economy is the damage from higher U.S. tariffs on China's exports which will likely show up in the trade data over the next few months," said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

"I think Beijing will continue its current policy stance. There is no urgency to loosen monetary policy by cutting RRR or interest rate at this stage," he said, adding that policymakers may choose to wait for a few months before cutting rates given the trade uncertainties.

Data released by the National Bureau of Statistics (NBS) on Monday showed retail sales, a gauge of consumption, rose 4.0% in the January-February period, better than a 3.7% rise in December and marking the quickest rate since November 2024. Analysts had expected retail sales to grow 4.0%.

Household consumption in the first two months was buoyed by holiday spending during the 8-day Lunar New Year holidays, when China's box office raked in record takings with animated hit "Nezha 2".

In the annual parliament meeting earlier this month, China's leaders pledged stronger fiscal and monetary support for the economy, with a particular emphasis on spurring domestic consumption.

Among other measures, they have lined up 300 billion yuan ($41.5 billion) for a recently-expanded consumer goods trade-in scheme for electric vehicles, appliances and other goods.

"Retail sales growth was decent, reflecting the vital role of subsidies in supporting home appliance and mobile phone sales," said Tianchen Xu, senior economist at the Economist Intelligence Unit.

However, the effect of the scheme may "fade over time", with auto sales already down in the first two months, he added.

The NBS data showed home appliance and audio-visual device sales grew 10.9%, compared with December's 39.3% jump. Catering revenue, however, rose 4.3% underpinned by the festival boost, faster than the 2.7% rise in December.

On Sunday, China unveiled a "special action plan" to boost domestic consumption, featuring measures including increasing residents' income and establishing a childcare subsidy scheme.

Addressing a press conference in the afternoon, an official from the country's top economic planner acknowledged the weak consumer confidence, while the People's Bank of China pledged to keep liquidity ample via measures such as cuts to the reserve requirement ratio.

China's Shanghai Composite Index closed up 0.2%, while the Chinese yuan was steady against the dollar, as markets took in stride the mixed set of economic data.

UNEMPLOYMENT, TRUMP WOES

Highlighting the stress facing households, the urban survey-based jobless rate in February climbed to 5.4%, the highest in two years.

U.S. President Donald Trump has piled an additional 20% of tariffs on all Chinese goods and is threatening more action. Exports were one of the lone bright spots for China's economy last year.

With factories shutting down temporarily during the Lunar New Year holidays, China's industrial output grew 5.9% year-on-year in the first two months, slowing from the 6.2% expansion in December. However, it was ahead of expectations for a 5.3% rise.

China publishes data for the two months in a combined release to smooth out the impact of the LNY holidays, which fall in either of the two months.

Fixed asset investment, which includes property and infrastructure investment, expanded 4.1% in the January-February period year-on-year, versus expectations for a 3.6% rise. It grew 3.2% in 2024.

The real estate sector, while showing some improvement, remained frail.

Property investment fell 9.8% in the first two months of 2025 year-on-year, after tumbling 10.6% in 2024. An NBS spokesperson said the country's housing market faces some pressure despite signs of stabilising.

That suggests policymakers may struggle to keep the economy on an even keel amid the threat of more U.S. tariffs.

In a note to clients, Goldman Sachs analysts said the boost from exporters' frontloading late last year may have subsided and the adverse effect from higher U.S. tariffs may have started to kick in.

"January-February activity data and our high-frequency tracker for early March pointed to a modest slowdown in sequential GDP growth momentum in the first quarter vs the fourth quarter in 2024."

For 2025 as a whole, some analysts say the growth impulse could be uneven.

"We expect the recovery to continue over the coming months, but given the wider headwinds weighing on China's economy, we don't expect any near-term improvement to be sustained for long," said Zichun Huang, China economist at Capital Economics.

($1 = 7.2308 Chinese yuan renminbi)

(Additional reporting by Yukun Zhang and Ryan WooEditing by Kim Coghill and Shri Navaratnam)

Related

Asia|Environment|Health|Political|US|World

Agent Orange cleanup and other efforts critical to ties with Vietnam jeopardized by USAID cuts

Asia|Business|Economy|Finance|Stock Markets

Foreign investors jilt India as growth falters and China beckons

Asia|Political|World

Taiwan practices to mobilise troops fast if China drills turn into attack

Asia|Business|Economy|Finance|Political|US

BOJ Governor Ueda's comments at news conference

Local

Local|News

Survey reveals Gen Z experiences burnout earlier

Local|Crime|News

LAPD reports drop in homicides, other crimes for 2024

Lifestyle|Local

Holi celebrations in Los Angeles this weekend

Local|Lifestyle|News|WrittenByLAPost

Los Angeles Marathon to take place Sunday

Share This

Popular

Asia|Environment|Health|Political|US|World

Agent Orange cleanup and other efforts critical to ties with Vietnam jeopardized by USAID cuts

Agent Orange cleanup and other efforts critical to ties with Vietnam jeopardized by USAID cuts
Asia|Business|Economy|Finance|Stock Markets

Foreign investors jilt India as growth falters and China beckons

Foreign investors jilt India as growth falters and China beckons
Asia|Political|World

Taiwan practices to mobilise troops fast if China drills turn into attack

Taiwan practices to mobilise troops fast if China drills turn into attack
Asia|Business|Economy|Finance|Political|US

BOJ Governor Ueda's comments at news conference

BOJ Governor Ueda's comments at news conference

Political

Europe|MidEast|Political|World

German foreign minister: Resumption of Gaza fighting threatens Arab peace efforts

German foreign minister: Resumption of Gaza fighting threatens Arab peace efforts
Economy|Europe|Finance|Political|World

Germany to release extra 3 billion euros in military aid for Ukraine, source says

Germany to release extra 3 billion euros in military aid for Ukraine, source says
Business|Economy|Political|US|World

South Korea industry minister to visit US to discuss tariffs, sensitive country status

South Korea industry minister to visit US to discuss tariffs, sensitive country status
Africa|Economy|Finance|Political

South Africa inflation steady, central bank seen holding rates

South Africa inflation steady, central bank seen holding rates