China’s Retail Sales Surge in May, But Property Sector Weighs on Investment

Spending Accelerates on Policy Support and Improved Sentiment

China's retail sales rose to their highest pace in 17 months in May, signaling stronger domestic demand. The rise follows front-loaded stimulus measures from Beijing, aimed at reviving consumption and boosting public confidence.

Improved sentiment after the recent US-China tariff détente also supported upbeat export and industrial production growth.

Property Weakness Drags Investment Lower

Despite the consumer-side strength, the property sector remains a major drag on the Chinese economy. The continued contraction in real estate activity pulled down headline fixed asset investment (FAI), highlighting the uneven nature of China’s recovery.

FAI remains under pressure as the government hesitates to enact a full-scale property bailout. Analysts suggest that additional stimulus and regulatory easing may be required in the coming months.

Outlook: Balanced Recovery or Patchy Progress?

China's economy is showing signs of rebalancing, with consumer-led growth gaining traction. However, structural issues in real estate and slowing private investment could offset the momentum, especially in H2 2025.

Key Data Highlights:

• Retail Sales (May): +6.4% YoY (17-month high)
• Industrial Production: Moderate growth amid tariff relief
• Fixed Asset Investment: Weak due to real estate drag

Related Articles on Tredu.com:

• China Retail Sales Beat Expectations in May
• US-China Tariff Truce Boosts Global Market Sentiment
• Asian Markets Mixed as Property Concerns Linger in ChinaSpending Accelerates on Policy Support and Improved Sentiment