ered around the politically significant 5 per cent target, allowing policymakers to declare success. However, the future looks far less reassuring for retailers. Retail sales grew just 0.9 per cent year on year in December, missing economists’ expectations of 1.2 per cent growth and slowing from 1.3 per cent in November, the softest pace since December 2022. In the past year, consumption has been weighed down by a prolonged property downturn that continues to erode household wealth, cautious wage growth and persistent uncertainty over employment prospects. Headline inflation showed signs of life with consumer prices rising 0.8 per cent last month, the fastest pace in nearly three years. However, that uptick did little to alter spending behaviour.  A consumption recovery that remains uneven For 2025 as a whole, total retail sales of consumer goods reached 50.12 trillion yuan, up 3.7 per cent from the previous year. Urban retail sales grew 3.6 per cent, while rural areas expanded slightly faster, at 4.1 per cent. By category, goods sales rose 3.8 per cent, and catering revenue increased 3.2 per cent. Within goods, several segments recorded double-digit growth among enterprises above a designated size: communication equipment surged 20.9 per cent, cultural and office supplies rose 17.3 per cent, sports and recreational goods climbed 15.7 per cent, while household appliances and audio-visual equipment increased 11 per cent. Spending on daily necessities also picked up, with sales of grain, oil and food rising 9.3 per cent. Online channels continued to outpace brick-and-mortar retail. E-commerce sales reached 15.97 trillion yuan, up 8.6 per cent year on year. Online sales of physical goods grew 5.2 per cent, accounting for 26.1 per cent of total retail sales. Services consumption showed comparatively stronger momentum. Retail sales of services rose 5.5 per cent, led by cultural, sports and leisure activities, tourism-related spending, communications and transportation. An economy leaning on exports The imbalance is unsettling for economists, who argue that weak domestic demand is pushing China into an increasingly fragile dependence on overseas markets. “Plunging investment and weak household consumption have made the Chinese economy increasingly reliant on exports to power growth, a situation that is untenable for China as well as the world economy,” said Eswar Prasad, professor of trade policy and economics at Cornell University, in comments to CNBC. That reliance is becoming riskier as trade tensions with the US intensify and global demand shows signs of fatigue. With investment slowing and property still in retreat, consumption remains the missing pillar of China’s growth model. Economists also warn that the deeper concern lies not in real growth, but in nominal terms. Sluggish price growth translates into weaker revenue expansion for companies and muted wage expectations for households, a feedback loop that continues to weigh on confidence. “Despite reaching the well-engineered 5 per cent real growth target last year, the Chinese economy will face more pressure in 2026,” Gary Ng, senior economist at Natixis, said. “The sharp deceleration in nominal economic growth will continue to affect wages and corporate profits – a persistent phantom haunting consumer and business confidence.” Beijing’s policy bet on consumption  Meanwhile, officials remain cautiously optimistic. Speaking to local media, the head of the National Bureau of Statistics said there are “numerous positive factors” supporting consumption growth, citing China’s vast consumer base and continued upgrading toward higher-quality goods and services. In addition, the government has already allocated 62.5 billion yuan from the first batch of ultra-long-term special treasury bond funds, with more expected to follow. Authorities have also pledged to ease what they describe as “unreasonable restrictions” across parts of the consumption sector, as Beijing doubles down on efforts to turn spending into a more durable engine of growth. Further reading: Why is China’s retail growth losing momentum despite government incentives?