Chinese consumers are finally starting to spend again after the
pandemic-induced slump, but the recovery is unbalanced and overly
reliant on luxury goods, with poorer Chinese still cautious.To get more
news about WikiFX, you can visit wikifx official website.
Consumption has started to catch up to the much stronger rebound in industrial
output, with retail sales growing in August for the first time this
year. Spending on luxury goods, cars and electronics is leading the
charge, rising faster than food, clothing and other essentials.
Source: National Bureau of Statistics, China Passenger Car Association, Gaming Inspection and Coordination Bureau of Macau SAR.
Note: All data shows % change from previous year*Feb. values show combined
Jan.-Feb. data.While the supply side of Chinas economy has shown
resilience, a strong and broad rebound in spending is needed for a more
meaningful economic recovery. Even though the virus is under control,
income and job losses due to the pandemic have made poorer Chinese
unwilling or unable to increase spending, keeping a lid on the rebound.
“Higher-income households have probably built up savings, because of the forced
reduction in consumption during lockdown, and could now be ready for a
spending spree. It is lower-income households that face a longer slog of
normalizing their finances,” He Wei, an analyst at Gavekal Dragonomics,
said in a recent report.
What Bloombergs Economists Say...
“Consumer confidence appears to be coming back even without a vaccine. This is
reflected in strong pickups in sales of non-essentials, such as
cosmetics and jewelry, in recent months. Improved sentiment and spending
at home in lieu of overseas trips should help support private
consumption.”Luxury spending in China will grow 20%-30% this year,
according to a report from Boston Consulting Group, but much of that
growth is going to come from consumers in the 50 largest and richest
cities. People in the other 2,206 cities bought only a quarter of all
luxury goods in April-July this year, and their spending was down 4%
compared with 2019, according to the report. One luxury where spending
hasnt rebounded is gambling in Macau, which is forecast to see an 81%
drop in revenue this year, according to Credit Suisse analysts led by
Kenneth Fong. Gaming in the city is traditionally a good indicator of
discretionary spending in China, but that came to a crashing halt in
February.
Travel is another sector where there‘s still a long way to go to recover from the damage caused by the pandemic. Real-time data
from China’s 11-biggest cities shows that people are still somewhat wary
about going out via public transport.
Source: Weibo, data compiled by Bloomberg. Shows seven-day moving average. 11 cities are Beijing,
Shanghai, Guangzhou, Shenzhen, Wuhan, Nanjing, Chengdu, Xi'an, Suzhou,
Zhengzhou, and Chongqing.
