China says lull in home sales led to slower consumer spending growth in first six months
Per capita consumption by urban residents rose 4.7pc year on year in the first half of 2018, down from 5.1pc a year earlier
Slower income growth and fewer home sales are hurting consumer spending growth in China, an official with the country’s planning agency said on Thursday, although consumption is expected to pick up again as various seasonal factors recede.
A slowdown in home sales growth in the first half of the year to 3.3 per cent from 16.1 per cent a year earlier had hit spending on housing-related items such as furniture, Liu Yunan, a deputy department head at the National Development and Reform Commission, said at a news conference.
Weaker spending growth this year has raised some doubts about China’s efforts to rebalance the economy towards domestic consumption away from credit-driven investment.
Per capita consumption by urban residents increased 4.7 per cent year on year in the first half, compared with 5.1 per cent growth a year earlier, and weaker than the 6.8 per cent growth in the overall economy. Per capita consumption including rural residents increased 6.7 per cent in the first half.
“In addition, the slowdown in household income growth may also have constrained some residents’ spending power and expectations … Our preliminary judgment is that the supporting effect of income on consumption has also weakened,” Liu said.
He said he expected consumer spending growth to pick up again as one-off and seasonal factors retreated.
Retail sales growth had mainly been dragged by delayed car purchases in anticipation of tariff cuts and the timing of a holiday in June, but that spending should see “some degree of a rebound”, he said.
He said also that the official retail sales data did not fully capture overall consumer services spending and he believed China’s consumption growth was still “reasonable”.
“Overall I think our country’s household consumption will maintain stable growth,” he said.