Retail sales growth slows in China; popularity of online shopping remains strong

The growth in retail sales, a fundament support for economic growth, has slowed this year. Real on-year growth in retail sales in October was less than 9 %. The slowdown in growth partly reflects lower growth in disposable incomes. On-year growth in urban household incomes fell to below 6 % in September. The retail sales figures collected by the National Bureau of Statistics, however, are not a direct measure of private consumption, because they include procurements of government agencies (including the military) and state-owned enterprises.

NBS retail sales figures for the first ten months of the year show that 12 % of retail trade was conducted online. Even if the growth in online retail has slowed, it still rose at a pace of 26 % y-o-y. During the “Single’s Day” shopping rush on November 11, China’s 16 largest online retailers posted sales of 180 billion yuan (up 44 % from last year) of which net retailer Alibaba group reported sales of 121 billion yuan. The figure, however, includes transactions that were never completed. China Post estimates that November 11 sales generated deliveries for the post and courier firms of over 1 billion packages.

Otherwise, October economic data contained few surprises. Consumer price inflation accelerated slightly to 2.1 % and producer prices were up 1.2 % y-o-y.

Trends in industrial output, fixed investment and retail sales

Sources: Macrobond, BOFIT.