China’s retail sales beat expectations amid ongoing property slump

Economic data released by China indicated an improvement in consumption during May.

Retail sales exceeded expectations ahead of a major online shopping festival, even as US tariffs continued to negatively impact the country’s manufacturing and exports.

According to data released today (June 16) by the National Bureau of Statistics (NBS), retail sales, a key indicator of consumption, grew by 6.4% in May, compared to the 5.1% growth recorded in April.

The figure surpassed the 4.85% growth forecast by financial data provider Wind.

The increase in consumption figures came as China prepared for one of the year’s largest online shopping festivals on June 18, and as the government continued to boost consumer spending through a trade-in program for white goods and other household items.

According to the Ministry of Commerce, China’s trade-in program generated approximately 1.1 trillion yuan ($153 billion) in sales this year as of May 31. However, some regions have suspended their programs in recent weeks due to a depletion of funds.

Zhang Yuhan, chief economist at The Conference Board’s China Center, said the retail data “looked strong,” attributing this to a combination of “holiday effects and the ongoing impact of consumption-stimulating policies,” particularly in the dining and home appliance segments.

NBS data showed that sales of home appliances and audiovisual equipment increased by 53% in May, following a 38.8% rise in April.

However, Zhang noted that “China-US trade tensions, low industrial product prices, and a sluggish real estate market will be constraining factors for growth.”

Under pressure from US tariffs and fierce domestic competition, industrial production increased by 5.8% year-on-year in May, according to NBS data.

This figure was below the 6.1% growth recorded in April but exceeded Wind’s forecast of a 5.66% increase.

The NBS stated that the Chinese economy has maintained its stability while withstanding multiple pressures.

NBS spokesman Fu Linghui said, “Looking ahead, China has sufficient policies that can be dynamically adjusted according to changing conditions and will continue to provide strong support for maintaining stable and sustainable economic growth.”

The data follows last week’s announcement of the lowest quarterly export growth.

China’s national fixed-asset investment rose by 3.7% in the first five months of 2025, down from a 4% increase in the January-April period and below Wind’s forecast of 4.04%.

Real estate investment, which has long been a drag on the economy following solvency issues at several major property developers, continued to decline. It fell by 10.7% year-on-year in the January-May period, compared to a 10.3% drop in the first four months.

New home sales by floor area fell by 2.9% in the first five months, following a 2.8% decline in the first four months.

According to data from China Real Estate Information, the sales revenue of China’s top 100 real estate developers recorded a year-on-year decline of 7.1% in the January-May period. This drop was greater than the 6.7% decline recorded in the January-April period.

Zhang Zhiwei, president and chief economist at Pinpoint Asset Management, warned that the outlook for the Chinese economy remains uncertain, as the May data sent “mixed messages.”

Zhiwei stated, “The concentration of export activities in the first half of the year helped the manufacturing sector stay afloat. It is uncertain how long exports can sustain this momentum in the second half of the year.”

According to Huang Zichun, a China economist at Capital Economics, export growth is likely to slow further by the end of the year, as US tariffs remain high and exporters face broader restrictions.

Huang said this year’s budget indicates that fiscal support will slow in the second half of the year, while the ongoing downturn in the real estate sector will continue to weigh on growth.

The combination of these factors points to a further slowdown in the economy, with growth projected to be around 3.5% by the end of the year.

Meanwhile, government data showed that the urban unemployment rate fell to 5% in May from 5.1% the previous month.