China's consumer spending isn't roaring back to pre-pandemic levels yet
BEIJING — China's consumer spending still isn't growing as fast as it did before the pandemic, analysts said.
Retail sales for the Sept. 29 to Oct. 5 holiday period rose by 9% from a year ago, according to state media reports of Ministry of Commerce data. The figures did not include Oct. 6, the final and eighth day of the Golden Week holiday.
While that marked a pickup in pace from August, the multi-year trend in retail sales indicates less than 3% growth a year since the start of the pandemic, according to estimates from Christine Peng, head of Greater China consumer sector at UBS.
«What we are saying is there is a recovery but it's going to be gradual,» she told CNBC in a phone interview Tuesday. «Nowadays the consumption growth is still way below the pre-Covid level.»
China's retail sales fell by 0.2% in 2022, according to official figures. Retail sales had grown by 8% in 2019.
UBS expects consumption growth to pick up to 5% or 6% toward the end of 2024, Peng said, noting there's «no way» retail sales can go back to 9% in the near future due to low consumer confidence.
She also pointed to the impact of the property slump — since much of household wealth is in real estate — and a decline in government spending due to local debt troubles. Consumers remain uncertain about future income amid government regulatory tightening, she noted.
«Consumers have started to spend more money, but they still maintain a cautious attitude when it comes to how they are spending the money,» Peng said.
The long Chinese Golden Week holiday that ended last week saw domestic tourism rebound to around pre-pandemic levels. Overseas travel had yet to fully recover to 2019 levels.
Economic uncertainty contributed to Chinese residents' preference
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