Beijing and Shanghai Retail Sales Tumble in November, Easing Policies Fail to Boost Demand

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China’s November retail sales indicate a sharp decline in consumer demand in Beijing and Shanghai, underscoring the challenges of boosting domestic consumption despite recent easing measures.

China’s overall retail sales grew by 3.0% year-on-year in November, a deceleration of 1.8 percentage points from the previous month, according to National Bureau of Statistics of China (NBS).

However, the first-tier cities of Beijing and Shanghai experienced even steeper declines. Retail sales in Beijing fell by 14.1% year-on-year (prior: +0.7%), while Shanghai saw a similar drop of 13.5% (prior: +10.9%).

While part of the decline can be attributed to the pull-forward effect of consumption during the “Double 11” shopping festival, which boosted October’s figures, the November slowdown remains pronounced, even when compared to September, revealing a broader trend of weakening consumer activity.

In addition to the dampening effect on consumer confidence caused by the weak real estate market, some economic experts have pointed out that the withdrawal of foreign capital has also impacted consumption momentum in first-tier cities. With many senior executives from foreign companies concentrated in Beijing and Shanghai, the departure of this high-spending demographic has inevitably had a significant impact on overall local consumption demand.

The mobility of the younger population may also play a crucial role. During periods of stable economic growth, younger demographics tend to exhibit higher consumption capacity than older age groups. However, as economic growth slows and job opportunities in first-tier cities diminish, some younger individuals are opting to leave these cities in search of opportunities elsewhere, further exacerbating the downward pressure on consumption.

Despite the introduction of a series of easing policies since September, domestic demand has yet to show substantial improvement, raising concerns about China’s ability to achieve its 5% GDP growth target for the year.

In response to mounting economic pressures, the Chinese government pledged at the recent Central Economic Work Conference and Politburo meeting to adopt more proactive fiscal policies and moderately accommodative monetary policies in the coming year.

While specific measures and their scale have yet to be announced, Reuters reports suggest that the government may issue RMB 3 trillion in special sovereign bonds next year to stimulate domestic demand, support corporate equipment upgrades, and provide funding for investments.