China reports fastest industrial expansion in nearly two years; Retail sales growth misses estimates –

View of the Shanghai skyline from a container station.

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China reported on Friday that its industrial production grew in November at the fastest pace since February 2022, although retail sales growth fell short of expectations, pointing to a patchy recovery in the world’s second-largest economy.

Economists are approaching the China data with some caution given the low base effect. The country was in the final months of its strict zero-Covid restrictions in the last quarter of 2022, which had had a negative impact on the economy.

“The data is mixed,” Miao Ouyang, Greater China economist at Bank of America, told CNBC. “Looking at the entire data still shows that domestic demand is still on the weak side… and [the government] In any case, more needs to be done to stabilize the economy.”

China’s industrial production grew 6.6% in November from a year earlier, the country’s National Bureau of Statistics said on Friday. That beat expectations in a Portal poll of 5.6% and follows a 4.6% rise in October.

Retail sales rose 10.1% in November from a year earlier, the fastest pace of growth since May – although analysts had expected a 12.5% ​​rise in 2022 after a low base. Retail sales rose 7.6% in October.

Fixed investment in urban areas increased cumulatively by 2.9% in the first 11 months of the year, against expectations for growth of 3%. China’s urban unemployment rate remained at 5% in November.

Hong Kong stocks, among Asia-Pacific’s underperformers this year, posted accelerated gains after Friday’s data release. The Hang Seng index rose as much as 3% in mid-morning trading, although it is still down more than 14% in 2023 so far, heading towards a third annual loss.

The CSI 300 benchmark of the largest blue chips listed in Shanghai and Shenzhen posted more modest gains, rising 0.7% by midday, paring year-to-date losses to about 12.8%.

The world’s second-largest economy’s recovery from the coronavirus crisis has so far fallen short of expectations and has been plagued by a simmering real estate crisis, debt risks and chronic youth unemployment.

A range of policy support measures have failed to sufficiently improve economic sentiment, prompting calls for Beijing to step up its stimulus measures amid fears of a deepening economic slowdown.

Still, there are some signs that Beijing is focusing on growth, while highlighting the extent of the housing crisis.

On a cumulative basis, investments in infrastructure and manufacturing increased by 5.8% and 6.3%, respectively, year-on-year in the first 11 months; Retail sales rose 7.2% while investment in real estate development fell 9.4%, China’s NBS said.

Official data released earlier on Friday showed China’s new home prices fell for a fifth straight month in November, underscoring weak confidence in demand and investment as some of the biggest real estate developers face serious debt problems as Beijing tries to reinstate its to reduce the once inflated real estate sector.