Beijing stresses positives after car and appliance sales raise hopes for coronavirus rebound
- Government highlights strong consumer spending in selected areas over Labour Day holiday
- But private analysts say recovery remains modest and warn it depends on the global outlook
The China government continued to push its optimistic view of economic recovery on Friday, saying consumer spending on durables such as cars and home appliances received a significant boost during the recent Labour Day holiday.
But economists warned that the pace of the economic rebound remained modest, with the grim outlook for the global economy and mounting stress of domestic job losses and income cuts continuing to hold back spending by the nation’s more than one billion consumers.
Consumer spending on goods and services accounted for about 60 per cent of economic activity last year, so Beijing is counting on China’s middle class to power the economic recovery in the months ahead.
But the positive narrative depended on the selective use of statistics.
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During the holiday period, which ran from May 1 to May 5, car sales at major firms saw a healthy increase in certain areas of the country.
Sales were up by 49.6 per cent in Shanghai compared with a year earlier, and rose by 28.5 per cent in Chongqing and 8.8 per cent in Zhejiang province, commerce vice-minister Wang Bingnan said on Friday.
However, he did not give a total national car sales figure.
Figures from the government-backed China Association of Automobile Manufacturers released the previous day also said that car sales for April were set to rise to 2 million units, a 0.9 per cent increase compared with a year earlier.
Data from the China Passenger Car Association, another industrial body, also showed a moderate improvement in car sales.
Nationwide average daily sales rose 12 per cent from a year ago in the fourth week of April, reversing a drop of 0.5 per cent in the previous week.
Wang said that sales of home appliances on some e-commerce platforms had risen by over 100 per cent during the holiday, without elaborating.
Total online sales of physical goods surged 36.3 per cent compared with the same period from a year earlier, he added.
“The national market rebounded significantly during the May Day holiday. The recovery in consumption accelerated, showing the strong resilience and vitality of the Chinese market,” Wang said.
Major companies monitored by the commerce ministry saw their sales rise 71.1 per cent during the May Day holiday period compared with the Ching Ming Festival in early April, according to data released by the ministry on Thursday.
However, the Ching Ming holiday was two days shorter than the May Day holiday.
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The May Day holiday has been widely used as a gauge about how much the Chinese economy has recovered from the disastrous first quarter, when it shrank for the first time in more than 40 years.
Sales of expensive items like cars and appliances are closely watched by markets as good indicators of the willingness of China’s middle class to spend.
Even before the coronavirus hit, Beijing had decided to extend the May Day holiday this year by two days compared with 2019, in what was seen as an attempt to stimulate consumer spending to bolster growth.
But the Covid-19 pandemic caused a spike in unemployment and a year-on-year drop of 3.9 per cent in per capita disposable income during the first three months of the year.
Economists said that the entire economy was still far from returning to normal, though data showed consumer spending had gained some momentum.
Lu Ting, chief China economist at Nomura Bank, said that tourism and other consumer entertainment activity data remained lacklustre over the five-day holiday.
“The speed with which China’s economy achieves full recovery still depends largely on the global economic outlook,” analysts at Beijing-based consultancy Trivium China wrote in a note on Thursday.
China’s transport system handled a total of 121 million passenger trips during the May Day holiday, less than half compared with the same period of last year.
However, this marked a 17.9 per cent increase on the previous five days, transport vice-minister Liu Xiaoming told a press conference on Friday.
Figures from the culture ministry said that tourist activity was only half the normal level, with 115 million visitors and revenue of 47.6 billion yuan (US$6.7 billion).
