China’s retail sales rebound, but a shift in consumer habits makes the economic outlook fuzzy
- Recovery in Chinese consumer spending remains weak and has been led mainly by high-end consumption, leading analysts to wonder if the momentum is sustainable in the fourth quarter
- Uneven purchasing patterns and a drop in spending compared with income levels in the third quarter show China ‘has a ways to go to return to normalcy’
When Vivian Li walked into a popular hotpot restaurant in downtown Beijing last week, it was the first time she had dined out in two months.
Li, in her early 30s, has reined in her budget since quitting her job in the film industry in July. She had hoped to find a new job within three months, but that plan hasn’t panned out. So, she has been cutting costs by relying on public transport, purchasing discounted food via group-buying apps, and cooking just two meals a day at home.
Unemployment has not stopped Li from indulging in cosmetics, but it has prompted her to turn to lower-priced domestic brands. “I still have savings; it’s not the end of the world,” she said.
In similar fashion, a food-delivery driver surnamed Cai just bought a new car last month in Henan province, but he had to keep working in Beijing during this month’s “golden week” holiday period to ensure that he had enough money to make the payments.
As China’s economy rebounds from the doldrums of the coronavirus pandemic, its 1.4 billion consumers are increasingly showing their willingness to spend again on certain goods and services. And Chinese leaders are counting on a big uptick in domestic consumption to help drive economic development while resisting external pressure amid tensions with the United States in a post-coronavirus world.
In September, a significant increase in the sales of cars, cosmetics and jewellery – all discretionary spending items – helped retail sales of goods grow by 0.9 per cent in the third quarter, marking the first quarterly rise this year and contributing to an acceleration in the nation’s overall economic growth rate of 4.9 per cent in the July-September period, year on year.