Fastmarkets RISI Viewpoint: Are China's retail sales slowing and how long will it last?




SHANGHAI, September 13, 2021-

Eric Hu, Economist, Asian Paper & Packaging, Fastmarkets RISI

Chinese consumption grew less than expected in July. According to the National Bureau of Statistics, retail sales rose 8.5% year-over-year, which was below market expectations. In fact, if we look at retail sales growth levels over the last year after COVID-19 was successfully contained, growth has not been as strong as initially expected. Thus far this year, retail sales growth has gradually been stepping down from the higher levels seen early in the year after the impact of the low base effect waned and has dropped to around 5% – using a two-year annualized growth rate – a level which retail growth reached in the fourth quarter of 2020 when all new local cases were wiped out. This growth rate is about 3 percentage points lower than pre-COVID levels. Consumption in the second quarter of 2021 contributed 1.9 percentage points to total GDP growth (two-year annualized growth rate), much lower than 3.3 percentage points in the fourth quarter of 2019 and has become a major drag on economic development. So, what is causing the slowdown in Chinese retail sales growth?


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