China consumer spending ‘not fully recovered’ from US-China trade war despite improving sentiment

Chinese consumer spending “stabilised but has not fully recovered” in the first quarter of the year even though overall economic growth was stronger than expected due to Beijing’s stimulus measures, according to a China investment strategist and former US diplomat.

The nominal growth rate of household consumption actually slowed further to 7.3 per cent, down from 8.0 per cent in the fourth quarter and 7.6 per cent in the first quarter a year ago.

But gross domestic product, fixed asset investment and retail sales all improved from the fourth quarter, highlighting improved overall economic sentiment, although it remained weaker than during the first quarter last year, according to data released by the National Bureau of Statistics (NBS).

Retail sales rose 8.7 per cent in the first quarter compared to a year earlier, up from 8.4 per cent in the fourth quarter. But retail sales data does not fully capture spending on services and includes purchases by government agencies and so is not a true reading of private consumption.

Consumer spending, based on a broader NBS survey of households, remained relatively subdued in the first quarter.