What: China's retail sales saw a significant increase in October, rising by 4.8% year-on-year, but the property sector continues to struggle despite government stimulus efforts.

Why it is important: While the retail sector shows signs of recovery, the persistent decline in the property market poses a challenge to China's broader economic stability. The property downturn is contributing to deflationary pressures and undermining consumer confidence, complicating efforts to meet growth targets.

China's economic data for October revealed mixed signals, with retail sales experiencing the highest growth in eight months, rising 4.8% year on year, according to the National Bureau of Statistics. This increase was partly driven by government policies encouraging consumers to replace old goods with new ones and a weeklong holiday in October. However, the property sector remained under pressure, with new home prices dropping 0.5% compared to September and a year-on-year decline of 5.9%, the most since 2015. Industrial production also showed a modest increase of 5.3%, though it fell short of analyst forecasts. The persistent weakness in the real estate sector, marked by declining investment and falling home prices, continues to weigh on consumer confidence and add deflationary pressures. Beijing has introduced several support measures, including cutting lending rates, encouraging stock buybacks, and a debt refinancing package for local governments affected by the property slowdown. Despite these efforts, economists like Carlos Casanova and Zichun Huang emphasize the need for more policy support to stabilize the real estate sector, which is crucial for sustainable economic growth. The upcoming potential impact of a second Donald Trump presidency in the US, which could disrupt trade between the two major economies, adds another layer of uncertainty to China's economic outlook. Exports, which saw a significant increase in October, remain one of the few positive indicators in an otherwise challenging economic environment.

China's retail sales surge, but property market remains weak