Aug 15, 2024 08:26 PM

Analysis: What’s Behind China’s Spending Slump

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Consumption, a focal point of China’s efforts to boost slowing economic growth, weakened in the second quarter of this year due to lagging spending in the country’s larger cities and among companies, governments and other organizations.

At its July meeting, China’s Politburo emphasized that boosting consumption was crucial to increasing domestic demand.

An analysis of data on 28 first- and second-tier cities helps reveal where consumption has been weak.

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China's efforts to boost its slowing economic growth hinge on increasing consumption, but spending weakened in larger cities and organizational sectors.
Growth of per capita consumer spending and disposable income slowed significantly in the second quarter, impacting household consumption.
Declining revenues in corporate and government sectors have further weakened organizational consumption amid broader economic challenges including real estate market issues and regulatory changes.

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Who’s Who

Everbright Securities Co. Ltd.: Everbright Securities Co. Ltd. is represented by Gao Ruidong, its chief economist. The company is presumably a financial services firm in China. Specific details about Everbright Securities, such as its services or history, are not provided in the article. For more information, it’s suggested to look up the company directly.

AI generated, for reference only

What Happened When

the first half of this year (2024)：: Year-on-year growth of per capita consumer expenditure slowed to 6.8%, which was 3.1 percentage points higher than that of retail sales.

the first half of 2024：: Year-on-year changes in retail sales in first-tier cities were well below the nationwide 3.7% growth.

the second quarter of 2024：: Year-on-year growth of per capita consumer spending slowed to 5%, down from 8.3% in the previous quarter.

the second quarter of 2024：: Year-on-year growth of per capita residential disposable income slowed to 4.5% from 6.2% in the previous quarter.

the second quarter of 2024：: A gauge of residents’ willingness to consume came in at 68.5%, up 0.3 percentage points from the same period last year (2023).