Don’t worry, it’s all part of the plan.

Or part of a plan that aims to make the best of what I can’t help but describe as an increasingly difficult situation in China, where the statistics bureau on Tuesday delivered a dour update on investment and consumer spending, both of which contracted in May.

Note that this data — the monthly activity roundup from Beijing — is a marquee release. And not just for China, but for the global macro narrative more generally. I know most of you understand that, but it bears repeating every now and again lest anyone should get the impression these numbers aren’t worth the time it takes to parse them.

No one thought Tuesday’s retail sales readout would be encouraging, but economists at least expected aggregate spending to avoid a contraction. Alas.

As the figure shows, the 0.6% decline for May was the first since late-2022, when Xi Jinping abruptly lifted COVID protocols amid widespread public disaffection with the government’s strict pandemic curbs, which persisted far longer than harsh containment measures in other major economies.

Some of the weakness is just a base effect, but the trend’s unmistakable. The lackluster showing for May’s another chapter in the by-now-familiar story of a perpetually downcast Chinese consumer and a household sector experiencing a balance sheet recession.

Despite the PBoC’s efforts to boost lending, new yuan loans undershot estimates in May at just CNY520 billion. Recall that Chinese net repaid debt in April.

The growth rate for the outstanding loan stock was just 5.5%, yet another new low. As the figure reminds you, that metric was 14% or so a mere five years ago.

May’s credit data, released late last week, showed loans to households, including mortgages, contracted CNY141 billion following a near CNY790 billion contraction the month previous.

You can tell yourself a lot of stories to make those figures seem less dour, but the inescapable bottom line is that household credit demand remains quite weak. A corollary is tepid consumption.

Industrial production rose 4.5% in May, according to Tuesday’s figures, quicker than April’s pace. A lot of that was attributable to utilities. It was hotter than usual in China last month, so demand for electricity was high.

As SocGen’s Michelle Lam noted, commenting on the IP figures, “manufacturing also re-accelerated somewhat, and the available details suggest that most of the outperforming sectors overlapped with sectors showing strong export performance.”

The disparity between IP growth (i.e., supply) and retail sales “growth” (i.e., demand) was 5.1ppt in May, the widest in favor of industry since November of 2022, just before the COVID curbs were lifted.

I saved the worst for last. Cumulative fixed investment for 2026 now shows a 4.1% YTD decline versus the same period a year ago. Economists expected that figure to reflect a much shallower drop.

2025 was the first year on record during which investment declined. China’s tracking for a second consecutive annual drop.

The NBS blamed bad weather, but also said the country’s economic transformation (the “structural adjustment to new drivers of growth,” as the NBS put it) helps explain the alarming figures.

Property investment’s down more than 16% in 2026 versus the same period a year ago. By contrast, high-tech investment shows an expansion.

“Some companies are facing difficulties,” an NBS statistician conceded, in remarks accompanying Tuesday’s release. “But looking at the overall trend, the momentum of the economy remains stable.” (Whatever you say, comrade.)

SocGen’s Lam, along with the bank’s Wei Yao, suggested the Party might be countenancing all of this. “In a way, it is not a bad cure to allow investment to contract in a relatively controlled manner so that consumption remains weak but does not deteriorate as much, and the supply–demand imbalance can correct gradually,” they wrote. “In other words, if the world wants China to rebalance, a large contraction in China’s investment is something to get used to.”

The only people who can (centrally) plan us out of this mess are the people who (centrally) planned us into it, apparently.