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China Retail Sales Rise; Unemployment Jumps – The AUD/USD and Hang Seng Index React

By:
Bob Mason
Published: Mar 17, 2025, 02:44 GMT+00:00

Key Points:

  • China’s retail sales rose 4% YoY, but rising unemployment to 5.4% casts doubt on Beijing’s 5% GDP growth target.
  • House prices fell 4.8% YoY in February, raising uncertainty about a near-term housing market recovery.
  • China unveils a new action plan to boost domestic demand through wage hikes, subsidies, and consumption incentives.
China Retail Sales
In this article:

China Economic Data Challenge Beijing’s Domestic Consumption Goals

China’s economy faced scrutiny on March 17 as key indicators allowed investors to assess Beijing’s stimulus impact. The latest data covered China’s House Price Index, Industrial Production, Retail Sales, and Unemployment figures.

Housing Market Uncertainty Persists

Housing sector data offered mixed signals. The House Price Index fell 4.8% year-on-year (YoY) in February after declining by 5.0% in January. While the decline eased slightly, house prices continued to fall sharply, raising doubts about a near-term market recovery. According to China’s National Bureau of Statistics (NBS), house prices fell slightly in most cities, while first-tier reported price increases.

Retail Sales and Unemployment Test Beijing’s 5% Growth Target

Mixed retail sales and unemployment data challenged Beijing’s 5% GDP growth target for 2025 amid the ongoing transition to a consumption-driven economy.

  • Retail Sales: +4% YoY in January and February after rising 3.7% in December.
  • Unemployment Rate: Unexpectedly rose from 5.1% in January to 5.4% in February.
  • Industrial Production: +5.9% YoY in January and February, down from 6.2% in December.

While retail sales suggested Beijing’s stimulus measures were gaining traction, a sharp rise in unemployment could cloud the economic outlook. A deteriorating labor market may weigh on fragile consumer sentiment, potentially impacting the effectiveness of Beijing’s consumption-driven policies.

China data sends mixed signals.
More information in our economic calendar

Market Reaction to China’s Economic Indicators

The Hang Seng Index and the AUD/USD pair reflected investor caution as markets digested February numbers.

Ahead of China’s data, the Hang Seng Index climbed 1.11% to a morning high of 24,226. On Monday, March 17, the Index was up 0.84% to 24,161, signaling mixed market sentiment.

Hang Seng Index retreats from highs after CHhna's data.
Hang Seng Index – 3 Minute Chart – 170325

In the forex markets, the AUD/USD pair briefly rose to a post-report high of $0.63349 before retreating to a low of $0.63301. At the time of writing, the AUD/USD pair was up 0.13% to $0.63307, down from a morning high of $0.63378.

Aussie dollar pulls back on China data.
AUDUSD – 3 Minute Chart – 170325

While the data sent mixed signals, Beijing reaffirmed its commitment to policy support, helping to ease investor concerns.

Beijing Pledges Policies to Boost Wages and Consumption

On Sunday, March 17, CN Wire reported:

“China’s State Council and CPC Central Committee issue action plan to revitalize consumption to boost domestic demand. Action plan focuses on increasing incomes, improving consumption capacity, upgrading service quality, and optimizing consumption environment.”

Beijing’s new action plan aims to support consumption through measures, including:

  • Raising minimum wages, expanding work-relief programs, cracking down on wage arrears for SMEs.
  • Upgrade major consumption through trade-in programs for cars, appliances, and smart devices, with subsidies.

Looking Ahead

While China’s stimulus measures may stabilize regional markets, investors should closely monitor trade developments, inflation trends, and monetary policy signals here. Given the lingering economic uncertainties, a cautious approach remains essential.

About the Author

Bob Masonauthor

With over 28 years of experience in the financial industry, Bob has worked with various global rating agencies and multinational banks. Currently he is covering currencies, commodities, alternative asset classes and global equities, focusing mostly on European and Asian markets.

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