China’s economy is sluggish, with consumption still lacking. According to data released by the National Bureau of Statistics, the total retail sales of consumer goods in China increased by 2% year-on-year in June this year, falling below the expected average of 3.5% and marking the slowest growth in a year and a half.
On July 15th, data released by the Chinese Communist National Bureau of Statistics showed that total retail sales of consumer goods in June increased by 2.0% year-on-year, marking the slowest growth since February 2023. Looking at the seasonally adjusted month-on-month figure, total retail sales of consumer goods in June decreased by 0.12%, the first negative turn since August 2023.
The performance of total retail sales of consumer goods in June fell below market expectations. A recent survey of 15 domestic and foreign institutions by Caixin Media showed that economists had predicted an average year-on-year growth rate of 3.5% for total retail sales of consumer goods in June, with a forecast range of 2.4% to 4.9%.
From January to June, the retail sales of services increased by 7.5% year-on-year, a decrease of 0.4% compared to the previous value, but higher than the 4.3% year-on-year growth of commodity retail sales during the same period.
Breaking down the types of consumption, in June, the year-on-year growth of commodity retail sales was 1.5%, lower than the previous 2.1%; while catering revenue increased by 5.4% year-on-year, higher than the previous 0.4%.
In terms of specific goods, essential items such as grains and oils, as well as traditional Chinese and Western medicines, maintained growth in June. There was a divergence in the upscale consumer goods sector, with the cosmetics category turning negative year-on-year, decreasing by 14.6% compared to a 33.3% decrease from the previous month. The decline in jewelry consumption narrowed to 3.7%, while consumption related to travel decreased. Clothing and footwear consumption saw a reversal from growth to decline, with a 1.9% decrease, lower than the previous 6.3%. Petroleum and related products consumption also saw a narrower increase of 4.6% year-on-year.
However, official economic data released by the Chinese Communist Party has always been questioned by the outside world, and the actual situation may be worse.
Yù Jiànxùn, director of the Trade and External Economic Statistics Department of the National Bureau of Statistics, said that the foundation for the recovery of the consumer market in the first half of the year still needs to be consolidated, and the consumer purchasing power of residents needs to be further enhanced, with fluctuations in some bulk consumer goods.
Additionally, official data from the Chinese Communist Party shows that China’s gross domestic product (GDP) increased by 4.7% from April to June, the slowest growth since the first quarter of 2023, lower than the analyst forecast of 5.1% by Reuters and a slowdown from the 5.3% growth in the previous quarter.
Xu Tianchen, a senior analyst at the Economist Intelligence Unit (EIU), expressed concern over the 4.7% growth, saying it appeared as a low point since the second quarter of 2023. He mentioned, “We are also concerned about the decline in high-end consumption, with many non-essential spending areas like jewelry and automobiles declining, possibly due to recent deleveraging efforts and impacts on high-paying industries, further dampening employment and income prospects.”
Louise Loo, Chief Economist at Oxford Economics, stated in a report, “We estimate that the month-on-month decrease in non-essential retail spending is the largest since the Shanghai lockdown in April 2022.”