How strong is consumption demand in China? It has been reported that a ticket to a private lingerie show in Shanghai fetched 350,000 yuan (US$52,732) in an online sale.
That may be exceptional. On average, residents in Shanghai spent 29,441 yuan in the first three quarters of this year, according to a report released by the National Statistics Bureau. In Beijing, they spent 27,448 yuan on average, while Tianjin residents spent 20,658 yuan in the same period. That covers cash spending on both goods and services.
Shanghai residents ranked first in disposable income, at an average of 44,360 yuan in the first three quarters. Coastal provinces such as Zhejiang, Guangdong, Jiangsu and Fujian are among the nation’s 10 richest regions. By contrast, residents in western provinces like Sichuan and Xinjiang spent slightly above 10,000 yuan, while those living in Tibet spent less than 7,000 yuan in the same period.
Some say Chinese residents have strong demand for high-end products and daily essentials, but are less interested in mid-range products.
I’ll try to look at this trend from a macro perspective. The value of China’s imports and exports rose 11.2 percent in October in dollar terms, down 1.5 percentage points from the month before, while the country’s trade surplus slumped 21 percent from a year ago. The growth of both imports and exports moderated in October.
External trade data appears disappointing. In truth, however, China’s foreign trade growth has a strong seasonal pattern, and the growth rate for October is already the best among the first months of each quarter. In addition, structural reform will boost future demand for some imported products.
China has 14,220 public-private partnership projects by the end of September this year, with a total investment of 17.8 trillion yuan. About 1.8 trillion yuan has been invested in state demonstration projects, and the implementation ratio has increased 11 percentage points to 82.1 percent.
Henan, Yunnan and Shandong are the top three regions for these PPP projects, covering various areas such as utilities, transport, and environmental protection.
However, infrastructure spending has sharply dropped as shown in the national fiscal spending for October. There will be a 3.9 percent increase in the deficitin the next two months, which means government budget spending in infrastructure will moderate.
The Singles’ Day shopping festival reported record sales of 168.2 billion yuan on shopping sites Tmall and Taobao, up nearly 40 percent from the year before. That will retail sales figures for this month, especially for mobile devices, home appliances and furniture.
Online sales represent 19 percent of China’s total retail sales. And the strong growth in online sales means Chinese demand will remain robust.
China’s home sales in first-tier cities are also on the rise, but those in lower-tier cities have declined. The housing market is running out of steam after authorities rolled out measures to curb speculation.
This article appeared in the Hong Kong Economic Journal on Nov 20
Translation by Julie Zhu
[Chinese version 中文版]
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