Core Insights - China's investment continues to decline, with retail sales growing at their slowest pace since the Covid crash, indicating uneven economic growth and escalating trade tensions globally [1][7]. Economic Performance - Retail sales increased by only 1.3% in November year-on-year, marking the slowest growth on record outside the pandemic, significantly below the median forecast of 2.9% from analysts [2]. - Fixed-asset investment decreased by 2.6% in the first 11 months of the year, on track for the first annual decline since 1998 [3]. - Industrial output grew by 4.8% year-on-year, although it fell short of forecasts, suggesting that strong exports are sustaining production despite weak domestic demand [4]. Trade and Investment Dynamics - The persistent imbalance between supply and demand may lead to ongoing deflationary pressures in China, with an export-led growth model potentially exacerbating trade tensions with non-US economies [5]. - The reliance on foreign demand for growth leaves the Chinese economy vulnerable to external risks, especially as exports are expected to slow amid rising protectionism and trade tensions [7]. Government Response - President Xi Jinping has indicated a willingness to accept slower growth in certain regions and has emphasized the need to prevent "inefficient" investments, while also urging attention to the decline in capital expenditure [8]. - The Communist Party plans to release a collection of Xi's remarks focused on boosting domestic demand, highlighting a shift in focus towards the struggling domestic economy [9].