中国：年末表现弱于预期

Weaker end to the year than The sharper slowdown in retail sales and investmentreflected faded fiscal stimulus, worsened property woes, LG'slack of funding and manufacturing overcapacity. Theslowdown in IP was much milder thanks to green-tech and AI Yingke Zhou +852 2903 2653yingke.zhou@barclays.comBarclays Bank, Hong Kong Ying Zhang+852 2903 2652ying.zhang3@barclays.comBarclays Bank, Hong Kong Jian Chang +852 2903 2654jian.chang@barclays.com Following a broad-based slowdown in July-October, we note that almost all the domesticdemand indicators pointed to a further sharp deterioration in November, with a visibleslowdown and big miss in retail sales growth and deeper contraction in fixed asset investment.We think the rapid slowdown in domestic demand reflects a combination of factors, We highlight some key developments in the November data. •Retail sales growth slowed for the sixth consecutive month, slowing visibly to 1.9% inNovember from 2.9% y/y in October, even falling below the level seen in Q3 24 of ~3% beforeChina kickedoffthe trade-in subsidy program. The slowdown was again led by trade-inrelated retail sales, with an outright contraction in household appliances (Nov: -19.9%, Oct:-14.6%). Moreover, auto sales (~10% of retail sales) contracted 8.3% y/y in November (Oct:-6.6%), reflecting the payback from strong demand in H1, in our view. Our discussions with •FAI, on a single-month basis, posted afifthconsecutive month of outright contraction, falling11.1% y/y in November (Oct: -10.9%), the lowest since the pandemic. In particular, thecontraction in infrastructure widened from 11.5% in October to 13.2% y/y in November,hitting a five-year low. We think the rapid deterioration reflects local governments' lack offunding given the payback from the earlier front-loaded LGSB issuance and slumping landsales revenue. For context, land sales revenue is on course to fall to only ~CNY4trn in 2025 Property investment fell 30.3% y/y in November, a record drop (Oct: -23%), and propertysales remained deep in contraction, declining 17.3% y/y, still below the level before the policypivot in September 2024. The decline in exiting home prices has lasted for almost three years,with a 0.7% m/m drop in November, compared with the average fall of 0.5% over the pastyear and the drop of 0.7% in October. In our view, this will further dampen homebuyersentiment. Even with mortgage rates hitting a record low of 3.06%, household long-termloans (mostly mortgages) continued to drop on a y/y basis in November, pointing to weak Despite sharp and broad-based slowdown in demand indicators, industrial production (IP),the supply indicator, remained broadly stable at 4.8% y/y in November, versus 4.9% inOctober, thought it was visibly lower than 5.8% in Q3. We think the slower but still solid IPgrowth was supported by a visible rebound in exports in November, thanks to strong exportsin green-tech and AI manufactured components. Given China's GDP growth is still productionbased, we think the moderation in Q4 GDP growth may not be as rapid as the demand We expect property and consumption to remain key drags for 2026 growth. In particular, giventhe widespread ownership of property and the spillovers to upstream and downstream sectors,we think the sustained tumble of the property market will continue to reinforce the negativefeedback loops between property and the macroeconomy, labour market and deflationexpectations. Moreover, we think the ongoing household deleveraging, negative wealtheffectslinked to the housing market, andsoftnessin the labour market will weigh on the consumption That said, our base case expects exports to remain an important driver of growth next year(Barclays forecast of 3-5% for 2026, vs Bloomberg consensus: 2%), partiallyoffsettingweakerdomestic demand (led by private consumption and property). We think China's exports willcontinue to benefit from AI manufactured components and green-tech thanks to China'sstructural competitiveness in high-tech products, supported by a decade of industrialupgrading, and technological innovation. Our channel checks suggest that some majorauto, wind turbine, and energy storage system exporters remain upbeat on 2026 exports, given Details of November activity data Retail sales growthin November fell short of expectations despite a favorable year-earlierbase (Bloomberg and Barclays: 2.9%). Growth slowed sharply to 1.3% y/y, less than half thepace recorded in October (2.9%), marking the weakest performance since January 2023 whenChina reopened. The slowdown was primarily driven by goods sales, while catering activity Goods sales growth decelerated notably, to 1% y/y in November from 2.8% in October, theslowest pace since July 2023. Trade-in goods sales weakened across key categories amidsubdued demand, tighter controls on trade-in subsidies, and a less favorable base.Household appliance sales dropped for the second consecutive month, plunging 19.4% (Oct:-14.6%), recording t