China's Economic Modulation Art: A Balancing Act Between Stability and Challenges

China's economic landscape in November remains a fascinating mix of stability and challenges. According to the latest monthly report, retail growth has slowed as consumers held back spending on non-essential goods—drugstore items, alcohol, and clothing experienced subdued demand. Amidst this slowdown, the economic foundation remains robust, with encouraging trends like a slight recovery in the real estate sector. However, authorities urged caution: the external environment is complex, domestic demand is insufficient, and some companies are struggling with production and operational difficulties. The sustainability of the economic recovery needs further strengthening, stressed Fu Linghui, spokesperson for the National Bureau of Statistics. Despite a subdued increase in retail sales by 3 percent year-on-year—a slowdown compared to 4.8 percent in October—industrial production rose by 5.4 percent, almost unchanged from the previous month. Investments in fixed assets such as factories have, however, shown a slowdown. Real estate prices and home sales have generally declined, a result of regulatory measures against excessive developer debt. The COVID-19 pandemic continues to act as a dampener on economic activity. Yet, there is also light on the horizon: thanks to government incentives, sales of electrical appliances and vehicles picked up in November—a result of programs promoting the replacement of old equipment and cars. During the two-day planning meeting, China's leaders hesitated to provide details on stimulus measures, but the markets remain optimistic. The government expects annual growth of about 5 percent. Chinese markets experienced fluctuations, with the Hang Seng Index in Hong Kong falling by 0.6 percent, while the Shanghai Composite Index showed little change.