China, which is making every effort to boost domestic demand, saw a significant increase in retail sales last month. This surpassed market expectations and marked the highest increase in 1 year and 6 months. Major foreign media analyzed this as a temporary phenomenon due to the May holiday and shopping festival.

The scene shows fruit juice being sold at Jingdong Mall in Beijing, China. /Courtesy of AP News Agency

China's National Bureau of Statistics announced on the 16th that China's retail sales in May increased by 6.4% compared to the same month last year. This is significantly higher than the market expectation of a '5.0% increase' presented by Reuters and represents the largest increase since December 2023.

However, Bloomberg noted that it is difficult to link this to the consolidation of domestic economic recovery. The largest holiday period in China occurs in May, which has led to an increase in consumption seasonally, and this year, the largest shopping festival also started earlier in May compared to previous years, resulting in a temporary spike in retail sales.

China's industrial production in May increased by 5.8% year-on-year, falling short of Reuters' forecast of 5.9%. The fixed assets investment, which shows changes in capital investment in areas such as factories, roads, power networks, and real estate excluding rural areas, also increased by 3.7% compared to the same period last year, resulting in less-than-expected performance. Real estate development investment from January to May also decreased by 10.7% compared to the same period last year. The average urban unemployment rate nationwide in May was recorded at 5.0%, down 0.1 percentage points from the previous month.

Reuters quoted Xu Tianchen, a senior researcher at the 'Economist Intelligence Unit' (EIU), saying, "Areas with direct consumer subsidies, such as appliances, are showing effects, but sectors like real estate development are still struggling. In particular, in the future, there may be a 'triple whammy' due to regulations on public servant entertaining, the end of shopping festivals, and the cessation of subsidy support."