China Consumption Monthly Roundup | August 2023 Chartbook

Our Monthly Consumption Roundup tracks near-term consumption trends and underlying key drivers for China. Learn more about the key highlights for August.

Insights for What’s Ahead

• Growth in retail sales decelerated further in July, reflecting slowing momentum. Online sales outpaced offline sales, while in-person consumer spending remained relatively resilient. Looking at consumer spending on bigticket items, passenger car sales declined from a high base in July, while residential housing sales continued to fall. Although easing slightly from the previous month, household savings remained high in July, indicating that households are still cautious about the outlook. Consumer prices fell for the first time since 2021 into negative territory in July, further pointing to weak domestic demand.

• Looking ahead, China’s consumption outlook remains bleak. The main issue is persisting consumer confidence weakness, which is not likely to change anytime soon because of the ongoing downturn of the property sector and a challenging job market. In response, the government has rolled out a series of policies since last month to boost domestic demand and stabilize the property sector. The latest moves include two interest rate cuts in June and August and the decision to extend a special loan program designed to support troubled real estate developers in completing unfinished residential projects to May 2024. However, in our view, engineering a turnaround of the current situation would require more aggressive support measures, as well as more clarity on how authorities intend to realize recent policy pledges.