The unexpected growth offers some confidence in the Chinese economy and relief to policymakers already pushing revival efforts in the backdrop of weakness in various sectors.

China's retail sales grew by 6.4% last month, surpassing expectations and marking the fastest pace of growth since December 2023, according to official data released on Monday.

Amid broader pressure from U.S. tariffs, the unexpected expansion offers some confidence in the Chinese economy and relief to policymakers already pushing revival efforts in the backdrop of weakness in various sectors.

In recent years, Beijing has implemented several stimulus measures to boost consumption, including lowering interest rates, expanding credit access to small businesses, and offering subsidies for a range of consumer goods.

The boost from retail data was offset by a lower-than-expected industrial output reading. Output rose 5.8% in May, which was just shy of expectations and below the 6.1% growth rate in the previous month.

The benchmark CSI 300 Index of onshore stocks changed little.

According to a Bloomberg report citing an analyst, retail sales in the month were partly supported by a major shopping event. This year, JD.com's (JD) weeks-long 618 sale event kicked off in mid-May, earlier than its late-May start in 2024.

Beijing's retail subsidies also helped. Among products covered by the initiative, sales of household electronics soared 53%, marking the fastest pace on record.

Receipts of mobile phones and other communication equipment also jumped 33%.

While the latest data suggests that stimulus efforts may be gaining traction, China still faces the risk of a prolonged trade standoff with the U.S.

After imposing steep tariffs, both sides agreed to a 90-day truce and rolled back most of the duties in mid-May, even as talks continue toward a long-term resolution.

Meanwhile, China's exports grew a less-than-expected 4.8%, while exports to the U.S. plunged 34.5% from a year ago, marking the sharpest drop since February 2020, according to data released earlier this month.

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