Retail sales in China grew for the first time in 2020 since the coronavirus pandemic crippled most of the country’s economic activities.
China’s economic recovery appears to tread slowly but steady as consumers continue to spend more, making the country’s retail sales to soar again. Still, the head of Asia economics for consultancy and research firm at Oxford Economics said that the segment remains the “weakest link” among other sectors.
Retail sales climb 0.5%
Total retail sales of consumer goods in China for the month of August hit US$495 billion, as per a report released by China’s National Bureau of Statistics on Tuesday, September 15. The segment’s figure is also 0.5% higher compared to last year in the same period and is 1.25% higher than in July.
Under the segment’s categories like car sales and household appliances, sales climbed as much as 11.8% and 4.3%, respectively. Overall online retail sales year-over-year, on the one hand, increased by 13.3% only and is slower compared to July’s growth.
“It remains the case that China’s activity data are better than in other major economies, in part due to ‘first in, first out,’” the chief economist at ADM Investor service told Business Insider.
But according to McKinsey, consumer spending has been the government’s priority as the segment accumulates an estimated 60% of China’s gross domestic product (GDP).
The country’s retail sales for the first eight months of 2020 were down by 8.6%.
Segment has the slowest growth
On the flip side, Louis Kujis, the head of Asia economics for consultancy and research at Oxford, said that the retail sector remains the “weakest link” despite the upward trend.
Kujis sentiment was echoed by an investment bank from China too.
“Private consumption is lagging as consumers remain cautious about spending amid the pandemic,” China Renaissance Securities wrote in a report.
Year-on-year catering and restaurant sales, for example, fell by 7% in August from the previous figure of 11% in July. Online sales tread slower compared to July as well.
Other segments, on the other hand, have shown stronger signs of a rally. The growth for industrial production, for instance, has climbed as much as 5.6% year-on-year. The increase also marked a straight five-month growth as well as the sharpest since December last year.
“In the first eight months, the total value added of the industrial enterprises above the designated size went up by 0.4 percent year on year, shifting from negative to positive,” the Bureau said in a statement.