China’s Retail Sales Gain Momentum as Beijing Leans on Consumers to Counter U.S. Trade Strains

China’s Retail Sales Gain Momentum as Beijing Leans on Consumers to Counter U.S. Trade Strains

 Retail sales in China accelerated in January and February, offering a boost to policymakers striving to strengthen domestic consumption amid rising unemployment and slowing factory output. The latest figures highlight the economic challenges China faces as U.S. trade pressures intensify.

With tariffs imposed by the Trump administration threatening China’s export sector, officials have prioritized stimulating domestic demand to cushion the impact. Despite setting a 5% growth target for 2025, analysts caution that achieving this goal may prove difficult due to sluggish household spending, export pressures, and an ongoing real estate downturn.

Earlier this month, weak export and inflation data reinforced calls for stronger policy interventions to sustain economic momentum. However, Zhiwei Zhang, chief economist at Pinpoint Asset Management, warned that higher U.S. tariffs could further strain trade figures in the coming months.

"I expect Beijing to maintain its current policy approach," Zhang stated. "There’s no immediate need to cut interest rates or the reserve requirement ratio (RRR), but authorities might consider easing measures in the months ahead depending on trade conditions."

According to data from the National Bureau of Statistics (NBS), retail sales rose by 4.0% in the first two months of the year, up from 3.7% in December and marking the fastest growth since November 2024. The Lunar New Year holiday period played a key role in boosting household spending, with China’s box office reporting record earnings driven by the success of the animated film "Nezha 2".

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