China’s retail sales growth accelerated in the first two months of 2025, signaling a positive outcome for policymakers striving to enhance domestic consumption amid rising unemployment and declining factory output. This situation highlights the economic challenges posed by increasing trade pressure from the United States.
In response, Chinese leaders have prioritized expanding domestic demand to offset the impacts of U.S. tariffs that threaten the country’s vital export sector. Despite maintaining a growth target of “around 5%” for 2025, analysts express concerns that this goal may be difficult to achieve due to sluggish household demand, export pressures, and a long-standing property market crisis.
The latest data from the National Bureau of Statistics (NBS) revealed a 4.0% rise in retail sales during January-February, surpassing expectations and marking the fastest increase since November 2024. This growth was largely fueled by holiday spending during the Lunar New Year, particularly with record earnings from the animated film “Nezha 2.”
China’s leaders reaffirmed their commitment to providing stronger fiscal and monetary support to boost the economy, focusing heavily on stimulating domestic consumption. Initiatives such as a 300 billion yuan ($41.5 billion) consumer goods trade-in scheme are among the measures being implemented to encourage spending.
Though retail sales showcased solid growth, experts warned that the impact of such subsidies could diminish over time, especially as auto sales showed a decline. Furthermore, China faces pressures from rising unemployment, with February’s urban jobless rate reaching 5.4%, the highest in two years, compounded by the ongoing U.S.-China trade tensions.
Industrial output growth decelerated to 5.9%, while fixed asset investment rose 4.1%. Amid these challenges, some analysts predict that China’s recovery will be uneven in the year ahead, with expectations of a modest slowdown in GDP growth momentum.