China's retail sales growth slowed to 2.8% in early 2026 — weakness concentrated in cars and fuel

China reported combined retail sales of 860 billion yuan (roughly $120 billion USD) for January and February 2026, growing just 2.8% year-over-year. The slowdown was severe in autos, which fell 7.3%, and fuel, which fell 9.7%, while online shopping accelerated to 9.2% growth and online food sales jumped 20.7%.

Consumer spending is the lever China needs to pull to rebalance its economy away from infrastructure investment and toward domestic demand. A 2.8% growth rate signals that households are still hesitant to spend, even though online retail keeps accelerating. The divergence matters: people will buy groceries and clothes online at double-digit rates, but they won't buy cars or gas at normal levels, which suggests either genuine caution about employment and wages, or a structural shift toward smaller purchases. This is the data point Beijing watches monthly to measure whether its demand-side stimulus is actually working.