China’s economy is struggling, with consumption still lagging behind. According to data released by the National Bureau of Statistics, in June this year, the total retail sales of consumer goods in China increased by 2% year-on-year, falling short of the expected average of 3.5%. The growth rate dropped significantly from the previous month, hitting a one-and-a-half-year low.
On July 15th, data from the National Bureau of Statistics of the Chinese Communist Party showed that in June, the total retail sales of consumer goods increased by 2.0% year-on-year, marking the lowest growth rate since February 2023. Looking at the seasonally adjusted month-on-month data, the total retail sales of consumer goods in June fell by 0.12%, marking the first negative growth since August 2023.
The performance of retail sales of consumer goods in June fell below market expectations. A recent survey by Caixin Media on 15 domestic and foreign institutions showed that economists had forecasted an average year-on-year growth rate of 3.5% for total retail sales of consumer goods in June, with a prediction range from 2.4% to 4.9%.
From January to June, service retail sales increased by 7.5% year-on-year, a 0.4% decline from the previous value, but higher than the 4.3% growth in commodity retail sales during the same period.
Breaking down by consumption type, in June, commodity retail sales increased by 1.5% year-on-year, lower than the previous 2.1%; while catering revenue increased by 5.4% year-on-year, higher than the previous 0.4%.
Looking at specific categories, in June, essential items such as grain and oil food and traditional Chinese and Western medicines maintained growth. Discretionary consumer goods showed mixed results, with cosmetics seeing a year-on-year decline of 14.6%, a decrease from 33.3% the previous month; the decline in jewelry consumption narrowed to 3.7%; consumer spending related to travel decreased; clothing and footwear consumption saw a year-on-year growth rate decline from an increase to a decrease by 1.9%, lower than the previous 6.3%; petroleum and product consumption saw a narrowing year-on-year growth rate to 4.6%.
However, official economic data released by the Chinese Communist Party has long been questioned by the outside world, and the actual situation may be worse.
Yuan Jianxun, Director of the Department of Trade and Foreign Economic Statistics of the National Bureau of Statistics, stated that the foundation for the recovery of the consumer market in the first half of the year still needs to be consolidated, and the purchasing power of residents needs further enhancement. Some bulk consumer spending remains volatile.
Additionally, official data from the Chinese Communist Party shows that China’s GDP grew by 4.7% in the second quarter from April to June, the slowest growth since the first quarter of 2023. This figure is below the analyst’s forecast of 5.1% and represents a slowdown from the previous quarter’s 5.3% growth.
Xu Tianchen, senior analyst at the Economist Intelligence Unit (EIU), expressed concerns, stating, “The 4.7% growth is worrying as it comes off the low point in the second quarter of 2023.”
Xu Tianchen further mentioned, “We are particularly concerned about the decline in mid- to high-end consumption, with discretionary spending such as jewelry and automobiles seeing reductions, possibly due to recent deleveraging efforts and impacts on high-paying industries further curtailing employment and income prospects.”
Louise Loo, Chief Economist at Oxford Economics, also noted in a report, “We estimate that the month-on-month decline in non-essential retail spending is the most significant since the lockdown in Shanghai in April 2022.”