Chinese retail sales rose 7.4 percent on the year in December after growth of 10.1 percent in November, falling short of the consensus forecast for an increase of 8.0 percent. Sales rose 0.42 percent on the month after falling 0.06 percent previously.

In addition to monthly data for December and the quarterly GDP data published today, officials also published annual data, which they characterised in the accompanying statement as evidence of steady improvement in the economy's"momentum of recovery". Officials will announce growth and inflation forecasts for 2024 at the annual meeting of the National People's Congress in March, but today's statement suggests officials remain comfortable with current policy settings for now, despite ongoing weakness in the property market.

Today's GDP and monthly activity data were broadly in line with consensus forecasts, except for retail sales, which were somewhat weaker than expected. The China RPI rose from minus 14 to zero and the RPI-P rose from minus 10 to plus 10, indicating that recent Chinese data in sum are coming in close to consensus forecasts.

After rising 10.1 percent in November versus expectations for 12.5 percent, year-over-year sales in December are expected to slow to 8.0 percent.

Retail Sales measure goods that are sold to the consumer or end-user, generally in small quantities and in the state in which they were purchased by the retailer. China's retail sales are reported monthly. The critical value is the change from the same month in the previous year.

Retail sales tend to have a muted impact because the Chinese economy is not heavily reliant on consumer spending. However, the government is trying to stimulate consumer spending to give the economy more balance. To this end, the government put into place a basket of stimulus measures, including government subsidies and tax breaks for home appliances and cars, to expand consumption to sustain the economic growth, which was slowed by a slump in exports amid the global economic downturn.