China Economy Stalls as Reform Pressure Grows
Source: Global Finance News
Reporter: MD Rubel Islam
Published: Dec -15 , 2025 — 10:47 AM (GMT+6)
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| China’s slowing economy highlights weak consumer demand, falling retail sales and growing pressure for structural reform in November. |
Detailed News”
- China Economy Stalls in November as Reform Pressure Grows
- China Growth Slows as Weak Demand and Property Crisis Deepen
- China Economy Slows on Falling Retail Sales and Investment
China’s Economy Stalls in November: Calls for Reform Grow
Overview of China’s Economic Slowdown
China’s economy, the world’s second-largest with a $19 trillion economy, has shown worrying signs of slowing down in November. Both industrial output and retail sales expanded at their weakest pace in over a year, signaling mounting challenges for policymakers tasked with maintaining steady economic growth.
Analysts attribute this slowdown to multiple factors: fading consumer subsidies, a prolonged property crisis, and weakening domestic demand. The latest data from the National Bureau of Statistics shows that industrial output rose only 4.8% year-on-year, missing forecasts, while retail sales grew a mere 1.3%, the lowest pace since December 2022.
This stagnation underscores the urgent need for structural reform and a shift towards more consumption-driven growth, moving away from an over-reliance on exports and industrial production.
Weak Domestic Demand and Investment Contraction
A major concern for China’s economy is the ongoing contraction in fixed asset investment, which declined 2.6% in January-November compared to the previous year. Investment is losing momentum across sectors, particularly in real estate, where roughly 70% of household wealth is tied up. The property sector continues to face falling home prices, shrinking property investment, and declining home sales.
“The economy slowed across the board in November, and weak retail sales were particularly noteworthy,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management. This contraction has directly impacted consumer confidence, creating a negative feedback loop for domestic consumption.
Even major retail events like the Singles’ Day shopping festival, which was extended to five weeks this year, failed to significantly boost consumer spending, highlighting the fragility of the domestic market.
Export Reliance and Trade Challenges
China has historically relied on exports to offset weak domestic demand. The country’s $1 trillion trade surplus has been a key driver of its economic growth, but rising trade headwinds threaten this model.
Global reactions are becoming increasingly critical. For instance, France, where President Emmanuel Macron recently called on China to address unsustainable trade imbalances, and Mexico, which approved tariff hikes of up to 50% on Chinese imports, are signaling growing resistance to China’s export-driven growth. These import barriers may limit Beijing’s ability to use international markets as a buffer against domestic slowdown.
Policy Measures and Calls for Reform
Despite the slowdown, China’s leadership is committed to its five-year plan and aims to maintain a 5% growth target next year. Officials have promised a “proactive” fiscal policy to stimulate both investment and consumption. However, experts argue that more aggressive structural reform is needed to pivot from a production-driven economy to a household consumption-led model.
International institutions like the International Monetary Fund (IMF) and World Bank have urged Beijing to accelerate reforms, particularly in the property sector, to prevent prolonged economic stagnation. Without intervention, sectors such as electric vehicle (EV) production and car sales risk further decline. For example, Zeekr EV factory operations and broader EV markets have suffered due to falling consumer confidence, with car sales dropping 8.5% in November—the steepest decline in 10 months.
Sector Analysis: Automotive and Property Markets
The automotive sector in China remains a barometer of consumer demand. Weak car sales in November indicate that even historically strong year-end markets are not immune to the economic slowdown. Zeekr EV factory and other electric vehicle (EV) manufacturers are particularly vulnerable as consumers hesitate to make high-value purchases.
The property market also continues to pose challenges. Declining home prices, faltering property investment, and low home sales threaten to drag overall economic growth. Given that real estate accounts for a substantial portion of household wealth, failure to implement structural reform could dampen domestic consumption and limit the effectiveness of fiscal stimulus.
Inflation, Deflation, and Consumer Behavior
While China faces challenges of weak demand and slowing growth, inflationary pressures remain muted. Some economists warn of potential deflation in industrial and consumer sectors if consumption fails to pick up. Consumer behavior is increasingly cautious, with households prioritizing savings over discretionary spending, further weakening the link between investment and retail sales.
The contraction in fixed asset investment and weak retail activity demonstrates that traditional fiscal or monetary stimulus alone may be insufficient to rejuvenate the economy. Policymakers must explore long-term reforms to boost domestic consumption and diversify growth sources beyond exports.
International Context and Global Implications
China’s economic performance is closely watched by global markets. Rising trade tensions and import barriers mean that external conditions are becoming as critical as domestic factors. Institutions like the IMF and World Bank project slower growth trajectories, emphasizing the unsustainability of relying solely on exports.
World leaders are signaling a demand for China to address trade imbalances. France and Mexico are implementing measures to protect local industries, which could affect China’s trade surplus and necessitate strategic adjustments. Beijing’s response to these pressures will influence investment patterns and consumer confidence, shaping the broader economic outlook.
Path Forward: Balancing Reform and Growth
China’s leadership recognizes the need to strengthen internal capabilities to withstand both domestic and international challenges. The dual focus on consumption and production-led growth highlights a tension between achieving short-term growth targets and implementing meaningful structural reform.
Key policy priorities include:
Stimulating domestic demand through targeted subsidies and incentives
Stabilizing the property sector to protect household wealth
Promoting sustainable investment in industrial and technology sectors
Encouraging structural reforms to diversify economic growth drivers beyond exports
Accelerating these reforms could help China maintain stable, long-term economic growth, while mitigating the risks posed by global trade headwinds.
Conclusion
China’s November data paints a clear picture: the economy stalls amid calls for reform. Weak retail sales, slowing industrial output, declining investment, and a struggling property sector reflect an economy in transition.
While exports have provided a buffer, increasing global trade barriers and internal challenges underscore the urgency of structural reform. The success of China’s economic strategy will hinge on balancing short-term growth targets with long-term sustainability.
Policymakers face the dual task of maintaining the 5% growth target while steering the economy toward a more balanced, consumption-driven model. How China navigates this period will significantly influence the future of key sectors, including automotive, real estate, and industrial production, ultimately shaping global economic dynamics.
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