Retail sales growth grew 6.4% last month, the fastest pace since December 2023 and exceeding all estimates, according to official data released Monday. That helped offset a slowdown in the expansion of industrial output, which climbed 5.8%, missing the median estimate in a Bloomberg survey of analysts.
The latest snapshot of the economy offers the fullest glimpse yet into how China coped with the turmoil unleashed by US President Donald Trump’s trade war. A tariff truce reached by Beijing and Washington in mid-May gave temporary relief to exports from China that would have faced duties of as much as 145% from the US.
The unexpectedly strong consumption may give policymakers some measure of relief. The economy is suffering from a prolonged property crisis, deflationary pressure and worries about unemployment, which weigh on confidence among households.
Major online shopping platforms such as JD.com launched their annual so-called 618 shopping festival earlier this year, potentially contributing to the retail sales growth. Discounts on the platforms began around mid-May this year, compared with the end of the month in 2024.
The government, which set an ambitious economic growth target of about 5% for 2025, has previously made boosting domestic consumption a priority this year.
Still, the economy’s relative strength so far this year will likely buy the government more time before it needs to deploy more support to prop up growth. China’s four-month budget deficit reached a record high, a stimulus push followed in May by the central bank’s cuts to its policy rate and the reserve requirement ratio.
The urban jobless rate was 5% in May, while growth in fixed-asset investment was 3.7% in the first five months of the year. China’s new home prices fell 0.22% in May compared to the previous month, the worst drop since October.
The government has brought forward its sales of bonds this year, providing an early boost to infrastructure project funding.
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