Unlike China’s highly successful online shopping festival this week, the stock market has been tepid.
After three weeks’ rally, the A-share market began to cool down in the past two trading days. The Shanghai Composite Index was up 0.27 percent at 3,650 points on Wednesday.
The latest economic data did not offer any surprise. The sluggish situation continues even as the government thinks of more ways to stimulate the market.
Compared to the anemic stock market, the Double 11 event was feverish. As of 11:50 a.m. Wednesday, sales on Tmall surpassed 57.1 billion yuan (US$9 billion), the full-day record in 2014.
We need to determine whether the high sales record of online shopping reflects strong domestic demand, or is just a shift of demand from physical stores to online platforms.
The latest government data shows that the size of the retail market hasn’t increased because of the popularity of online shopping. It’s the people’s consumption patterns that have changed.
So while e-commerce companies are busy adding their sales figures, traditional retail firms are actually getting weaker.
That puts into doubt whether “Internet Plus” will become one of China’s new growth engines.
Aside from consumption, investment data is also disappointing.
In the first 10 months, the value of fixed asset investment rose 10.2 percent from a year earlier. The growth is 0.1 percentage point slower compared with the first nine months.
During the same period, investment in property development rose 2 percent to 7.88 trillion yuan. But the growth rate was down 0.6 percentage point from the January-September level.
All this data implies that there’s really no significant sign of recovery in the fourth quarter.
The State Council on Wednesday launched more measures to boost domestic demand.
These include allowing private entities to enter the education, health and culture sectors and easing restrictions in the household registration system.
Supportive fiscal and financial policies were also launched to help encourage consumer loans and consumer product imports.
The central government has shown that it is determined to boost domestic demand to support economic growth. That could have an impact on the retail sector.
This article appeared in the Hong Kong Economic Journal on Nov. 12.
Translation by Myssie You
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