In June, China's consumer spending showed persistent weakness, particularly highlighted by the 4% growth in online sales during the 618 shopping festival, a stark decline from the 15.2% growth seen the previous year, according to retail data firm Syntun.
This trend indicates that household spending remains a significant challenge for the Chinese economy, despite stronger performance in exports and technology sectors. Retail sales fell by 0.6% in May, marking the first decline since the end of pandemic restrictions in 2022.
Goldman Sachs analyst Hui Shan noted a widening gap between high-tech sectors and traditional consumption, suggesting that these trends are likely to continue. The firm revised its second-quarter GDP growth forecast down to 4.5%, while maintaining a full-year outlook of 4.7%.
The 618 festival, which generated approximately 934 billion yuan ($137.86 billion) in sales, showed subdued consumer demand despite promotional efforts. Notably, Alibaba's Tmall led in sales, but overall e-commerce growth was only 0.9%. There was a notable increase in sales of secondhand electronics, which rose nearly 80%, indicating a shift towards lower-cost goods.
Jacob Cooke, CEO of WPIC, pointed out that while home appliance sales, which had previously surged due to state subsidies, have declined, there is growing demand for fashion, lifestyle products, and AI-related hardware.
However, the broader economic implications of AI advancements remain uncertain, with potential job displacement posing risks to the recovery of the property market and household consumption