China’s economy slows sharply as investment declines and retail sales miss forecasts

China's economy has entered a sharply decelerating phase, with economic data in November 2025 marking the worst performance in years across multiple key indicators. Fixed-asset investment posted a 2.6% year-on-year decline during the January-November measurement period—a historically significant threshold representing the first annual contraction in roughly three decades. This development signals a fundamental shift in the structural underpinnings of Chinese growth, moving away from the decades-long reliance on investment-driven expansion through infrastructure and real estate development.

The property sector remains the primary source of economic weakness. Real estate investment fell approximately 15.9% in the first 11 months of 2025 compared to the prior year, while new home sales by value dropped 11.2% over the same period. These figures are consequential because the real estate sector has historically represented a dominant share of Chinese household wealth accumulation. As property prices weaken and transaction volumes collapse, households experience a negative wealth effect that directly suppresses consumer spending patterns. Retail sales growth decelerated to just 1.3% year-on-year in November—the slowest expansion since restrictions from COVID-19 were lifted in December 2022—reflecting households' reduced purchasing power and confidence.

Industrial production also disappointed, with factory output growing 4.8% year-on-year in November, below the economist consensus estimate of approximately 5%. Chinese officials have publicly acknowledged the severity of the situation, citing "insufficient effective domestic demand" and signaling their intention to deploy more proactive macroeconomic policies. Forecasters now expect China's 2025 GDP growth to cool to 4.6%, falling short of the official growth target, with further moderation anticipated to 4.2% if current trends persist.

The broader implications extend beyond China's domestic economy. Risk assets globally, including Bitcoin and Ethereum, have demonstrated increasing correlation with macro sentiment and growth expectations. When conditions deteriorate and risk appetite contracts, these assets typically experience synchronized selloffs. However, the stimulus response from Chinese authorities could provide a countervailing support mechanism for risk assets, as historical policy easing cycles have generated liquidity that can benefit speculative assets.