After months of contraction, Chinese retail sales grew slightly for the first time since February, up 0.5% in the twelve months to August. This is a positive development for the Chinese economy, which up to now had only seen signs of recovery in the stimulus-fuelled producer economy. However, compared to the pre-COVID economy, this retail sales growth is disproportionately dependent on the growth in online retail sales, which grew by 9.5% annually in August. Despite reported new COVID cases in China hovering around zero, and an apparent return to ‘normality’, consumers still seem to be avoiding bricks and mortar stores. Furthermore, countries such as the US and the UK have experienced a much more pronounced rebound in retail sales, despite still being in the midst of the COVID-19 pandemic. This could suggest that, relative to other global powerhouses, there are fundamental weaknesses in China’s consumer environment. We explore this in more detail in our latest Global Economic and Markets Outlook, currently being presented to our clients.
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