China Misses Expectations on Retail Sales Growth — Here’s What That Means for Brands

China’s economy isn’t the powerhouse that it once was, and new data sheds light on how the slowdown is playing out for consumers and retailers.

According to the National Bureau of Statistics, retail sales rose 8.1 percent in November, the slowest pace since 2003. This figure also fell well short of the 8.8 percent expected by analysts, according to a Reuters poll, despite the impact of Singles’ Day, the Nov. 11 shopping extravaganza that generated $30.8 billion for Alibaba Group this year. In October, growth was similarly weak at 8.6 percent over the same period in 2017.

With luxury brands already taking a beating in the stock market over China-fueled investor fears, the latest indicators don’t offer any relief. Growth in industrial output likewise slowed to 5.4 percent, a pace not seen since early 2016, but retailers will be particularly looking at the drop in consumption as a bad omen for the new year.

What remains to be seen is whether the signs of a cooling economy help or hinder the U.S.’s trade negotiations with China. The two countries agreed to a truce on Dec. 1, both promising not to levy new tariffs or raise existing ones for 90 days while President Donald Trump and Chinese president Xi Jinping attempt to negotiate a trade deal. Trump, for one, believes the latest announcement gives the U.S. the upper hand, tweeting that the country “wants to make a big and very comprehensive deal.”

The administration also no doubt wants to assuage the worries of companies, many of whom have opposed the tariff standoff because it raises the cost of doing business.

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