China's retail sales increased in May at the fastest rate since late 2023, demonstrating notable resilience in the world's second-largest economy amid ongoing global economic challenges.

According to figures released by the National Bureau of Statistics, retail sales, a crucial indicator of consumer spending, climbed by 6.4 percent year-on-year in May, surpassing April's 5.1 percent growth.

The increase in retail sales is partly attributed to the early commencement of the '618' shopping festival, along with incentives from the government's trade-in program, which have encouraged consumer spending.

Analysts have noted that this growth suggests a recovery trajectory that remains intact, bolstered by targeted stimulus measures and supportive macroeconomic policies designed to stabilize the economy.

Louise Loo, a leading economist, has indicated that the data available thus far points toward a second-quarter GDP growth rate of approximately 5.2 percent year-on-year.

This estimate is slightly higher than current projections, driven by heightened export activity and a resilient services sector.

Industrial output in China also demonstrated growth, with value-added industrial production increasing by 5.8 percent year-on-year in May. Additionally, fixed-asset investment saw a rise of 3.7 percent during the January-May period, following a 4 percent growth in the first four months of the year.

Ming Ming, chief economist at CITIC Securities, emphasized that despite ongoing external uncertainties, China's economy is gaining momentum, supported by effective macroeconomic policies.

He noted a continued recovery in industrial production, a rapid rebound in consumer spending, and solid investments in manufacturing and infrastructure, reinforcing the basis for economic recovery.

Economic analysts have observed a shift in policy focus from investment towards consumption.

Lu Ting, chief China economist at Nomura, highlighted that the growth in retail sales, alongside slower increases in fixed-asset investment, indicates this policy transition.

Nevertheless, he cautioned that the initial boost from trade-in incentives may diminish in the latter half of the year as the baseline for comparison rises and potential challenges from a trade dispute with the United States loom.

Wang Qing from Golden Credit Rating International projected continued interest rate cuts by the central bank in the second half of 2023, alongside incremental fiscal policy measures aimed at further supporting consumption initiatives.

He also identified the stabilization of the housing market as crucial for boosting consumer confidence and household spending, which could mitigate the impact of external uncertainties.

In investment sentiment, Goldman Sachs recently reaffirmed its optimistic outlook on China's stock market, citing an improving medium-term investment climate for private enterprises.

The firm highlighted several major companies, including Tencent, Alibaba, Xiaomi, BYD, Meituan, and NetEase, as strong market leaders poised to benefit from the ongoing economic recovery.