• China's retail sales grew 3% on-year in November, missing expectations and showing weak demand.
• The property crisis and low consumer confidence are dragging down China's economic recovery.
• Stimulus measures and trade-in policies boosted appliance and car sales, but overall growth lags.

China has rolled out multiple rounds of stimulus measures to boost its economy this year, but consumers are still unsure about parting with their money.

In November, China's retail sales — a measure of consumption — grew 3% from a year ago, according to official data released on Monday. That's lower than a 4.8% expansion in October and a 4.6% rise that analysts polled by Reuters had expected.

The below-forecast retail figures reflect flagging consumer confidence in a month when retailers hold their biggest sale of the year: the Singles' Day shopping festival.

"This was the big disappointment of the month, as retail sales failed to build upon the momentum and came in well softer than both consensus and our forecasts," wrote Lynn Song, ING's chief economist for Greater China, in a note on Monday.

In its data release, China's statistics bureau described the country's domestic demand as "insufficient."

There were bright spots in November, with sales of household appliances growing 22% from a year ago and growth of car sales hitting a nine-month high of 6.6%, as the two categories were boosted by government trade-in programs.

However, overall discretionary spending was slow, with sales of cosmetics tanking 26% from a year ago. Sales of communications applications and gold and jewelry fell 7.7% and 5.9%, respectively.

Even the experiential "eat, drink, and play" sectors have started to fade after a solid outperformance for most of the year, Song wrote. Growth of sales in catering, alcohol and tobacco, and sports and recreation all slowed.

China is mired in an epic property crisis

China is grappling with a years-long property crisis. About 70% of China's wealth is parked in property, so the real-estate crisis is also damaging the consumer psyche.

China's leadership pledged after a meeting last week that it will boost consumption as a priority.

"With no convincing signs of a ground-up pick-up in consumption and confidence, Beijing is confronted by the risk of 'too little, too late' stimulus," wrote Vishnu Varathan, the head of macro research in Asia, excluding Japan, for Mizuho Securities.

China's retail sales data came about a month ahead of President-elect Donald Trump's inauguration. While on the campaign trail, Trump pledged to impose 60% tariffs on all Chinese goods. He has also threatened an additional 10% tariff on Chinese imports, citing the country's role in the fentanyl trade.

China's benchmark CSI300 was 0.4% lower at midday on Monday. Hong Kong's Hang Seng Index was 0.6% lower.

• A Chinese economist said China's official GDP figures may be higher than actual numbers.
• He said China's GDP is likely to grow between 3% and 4% in the next three to five years, but the official number is likely to remain at around 5%.
• China faces economic challenges including a real-estate crisis and high youth unemployment.

A prominent Chinese economist just said what many people suspected: China's official GDP numbers may not be accurate.

"We do not know the true number of China's real growth figure and maybe some other numbers," Gao Shanwen, the chief economist at SDIC Securities, said on Thursday.

Many people speculate that "after the pandemic, those numbers may not be so accurate," he said at an event hosted by the Peterson Institute for International Economics in Washington, DC. Gao previously advised the country's policymakers.

Gao said China's GDP probably averaged around 2% in the last two to three years even though the official number is "close to 5%," Gao said.

"If my speculation is correct, I think it might be more reasonable to expect a growth rate between 3% to 4% in the years to come, for the next three to five years," Gao said. "But we know, and I think, the official number will always be around 5%."

China reported 5.2% GDP growth last year and has a growth target of "around 5%" this year — which economists said is ambitious.

While there have been longstanding doubts over the veracity of China's GDP data, one economist explained to Business Insider in 2022 that the headline GDP figure is "systematically inflated" due to how it's calculated and that it's unlikely the central government in Beijing manipulates numbers.

Chinese youth are 'tightening their belts and eating noodles with the lights off'

Gao came under the spotlight recently for making comments at an investor conference about "lifeless" Chinese youths. Chinese censors have since taken the speech off the internet.

In the speech, Gao said his analysis of regional data showed that the younger the population of a province is, the slower its consumption growth.

China is now "full of vibrant old people, lifeless young people and middle-aged people in despair," Gao added.

"Young people are tightening their belts and eating noodles with the lights off," Gao said.

Gao's assessments of China's economy come as the country struggles to recover from pandemic lockdowns.

The world's second-largest economy is facing multiple issues, including a real-estate crisis, high youth unemployment, and deflation.

China's economy has been holding up this year thanks to robust exports — but the country's consumer demand has been dismal due to poor consumer confidence. Many people are trading down for cheaper purchases.

China's economy is still struggling to recover from the pandemic

On Thursday, Xinhua state news agency reported that top Chinese officials pledged to loosen monetary policy, increase the budget deficit, and issue more debt to boost consumption and maintain stable economic growth.

China's top leaders also pledged to "vigorously boost consumption" and domestic demand "on all fronts," per Xinhua, citing the two-day Central Economic Work Conference led by Chinese leader Xi Jinping this week.

China's new pledges and measures to shore up its flagging economy did not excite investors, especially since they were short on details, analysts said.

China's benchmark CSI300 Index was 1.8% lower at midday while Hong Kong's Hang Seng Index fell 1.7%.

"Due to the property meltdown, the fiscal crisis and worsening tensions with the US, China's economy is not in a normal downcycle, so it may take much more than a 'bazooka' stimulus package to truly reboot the economy," Nomura economists wrote in a note on Friday.

• Delta Air Lines is focusing on premium cabins to boost revenue and outpace economy sales.
• The premium demand is driven by millennials willing to spend more for an elevated experience.
• Delta's president suggested budget carrier Spirit failed because it was too focused on low fares.

Delta Air Lines believes a premium-focused strategy is the secret sauce to success, as outlined during its Investor Day in Atlanta on Wednesday.

President Glen Hauenstein said that premium demand is soaring thanks to millennials willing to pay more for an elevated experience. As such, premium seats — currently about 30% of Delta's inventory — will be a majority focus of any added capacity next year.

By 2027, the airline expects to make more money from premium seats than those in economy.

Hauenstein said focusing on the premium market will help Delta win against budget carriers that depend on low fares to lure in customers.

"I think [post-pandemic demand] had a very different impact on the carriers that were supplying premium products and services, which had a little bit of a downdraft, versus those who were just focused on price that had an incredible cliff to fall off of," he said. "I think we've seen that manifest itself in the bankruptcy we saw filed this week."

Hauenstein is referring to Spirit Airlines' filing for Chapter 11 bankruptcy on Monday. The low-cost airline has not posted a full-year profit since 2019 and has been forced to lay off staff and sell $500 million worth of planes to stay afloat.

United Airlines CEO Scott Kirby said in a June podcast that passengers prefer experience over low fares and that budget airlines may go out of business without making quality changes.

Breeze Airways CEO David Neeleman gave Business Insider a similar take in November, saying low-cost carriers should stop nickel-and-diming their customers.

Spirit and Frontier have bent to modern flyer expectations. Both overhauled their business models this year to offer more premium perks, such as extra legroom and business-class-like seats. They've also dropped most change and cancel fees.

Delta's presentation on Wednesday set the tone for the coming months, as airlines continue to struggle with high costs driven largely by inflation and labor, which have weighed on profit margins.

While the investments may take years to show full potential, at least in the near term, Delta CEO Ed Bastian has welcomed president-elect Donald Trump as a "breath of fresh air" as opposed to what he described as government "overreach" under the Biden Administration.

Delta's stock price was down about 2% after Wednesday's Investor Day and is up about 57% year-to-date.

Delta is doubling down on premium seats

Delta's premium cabins, including premium-economy upgrades, Delta One business class, and domestic first class, have long been profit drivers. So far, adding more of the expensive seats has been a boon to its bottom line, and it's showing no signs of letting up.

Delta said its Airbus A350-1000 aircraft will be introduced with about 50% premium seats, for example, while the airline plans to add lie-flat business class to A321neo jets.

This all comes after Delta had higher-than-expected earnings in the third quarter, largely anchored by premium seats, even though it was dinged by a costly CrowdStrike outage.

From July through September, Delta generated $5.3 billion in premium revenue compared to $6.3 billion for the economy cabin despite premium taking up less cabin real estate.

Hauenstein said Delta's biggest opportunity to add premium products and services is in the international market, where he said there is short supply but high demand.

He said that increase would come from retiring Boeing 767s, adding new A350-1000s, and reconfiguring existing A350-900s with more Delta One seats.

While executives didn't further discuss the previously hinted-at "business-class-lite" product that would unbundle business class, letting flyers buy only the seat but not other perks like lounge access, Hauenstein said there's revenue opportunity in segmenting premium economy and domestic first.

"That's where a huge revenue base is, and segmentation of that revenue base would potentially drive a significant improvement to the bottom line," he said.