China’s retail sales growth could reach 6% in Q4 after beating expectations in Aug: expert
Published: Sep 15, 2023 12:34 PM
Passengers check in at Hangzhou Xiaoshan International Airport in East China's Zhejiang Province on August 30, 2023. Photo: VCG

Passengers check in at Hangzhou Xiaoshan International Airport in East China's Zhejiang Province on August 30, 2023. Photo: VCG

China's retail sales, a main gauge of consumption, beat expectations in August thanks to a bustling summer travel peak and consumption-boosting measures, data from the National Bureau of Statistics (NBS) showed on Friday, further highlighting China's steady economic recovery.  

The pickup in August consumption has helped shake off some worries that China's consumption will continue to slump, experts said, predicting a continued rebound for the fourth quarter as supporting measures are set to further take effect. Fourth quarter retail sales could see a 6-percent growth or more, and annual consumption could contribute up to 70 percent to economic growth this year, one economist said. 

Retail sales of consumer goods in August recorded a year-on-year growth of 4.6 percent to 3.79 trillion yuan ($521.13 billion), 2.1 percentage points higher than the growth rate in the previous month, according to the NBS. Retail sales in the first eight months of the year reached 30.23 trillion yuan, up 7 percent on a yearly basis. There were several highlights for consumption in August, including a 12.4-percent growth in total revenue for the catering sector. 

The rebound in domestic consumption has played a vital role in driving economic development, Fu Linghui, an NBS spokesperson, told a press conference on Thursday, highlighting the significant recovery seen in service consumption. 

In the first eight months of 2023, retail sales of services increased by 19.4 percent, according to the NBS data. The sector has been strongly boosted by a surge in market demand for traveling and catering amid the just-concluded summer holiday peak, said Fu. 

A total of 1.84 billion domestic trips were made from June to August this year, with domestic tourism revenue reaching 1.21 trillion yuan, according to data. Meanwhile, China's total box office soared to 20.62 billion yuan during the summer season, setting a new record for the country's summer box office sales, according to data released by the China Film Administration.

The significant surge in retail sales has helped shake off some worries that China's consumption will continue to slump, Tian Yun, a veteran economist based in Beijing, told the Global Times on Friday.

The strong growth momentum is expected to last for the upcoming eight-day National Day holidays and the Mid-Autumn Festival holidays. Bookings for outbound travel during holidays have surged more than 20 times year-on-year on some domestic travel agencies, according to media reports on Friday.

The implementation of policies aimed at shoring up market confidence also contributed to the better-than-expected performance as they started taking effect, while factors that previously constrained consumption may be further stabilized, Soochow Securities said on Friday. 

Tian said that the consumption growth rate for the fourth quarter could reach around 6 percent or even more with the nation's continued efforts to optimize market confidence and boost consumption in lagging sectors such as the property sector. 

If the growth rate remained at the 6-percent level or above, annual consumption would contribute to more than two-thirds or even 70 percent to this year's economic growth, according to Tian.  

The recently implemented sweeping measures dedicated to bolstering the real estate market have already been showing effects to stabilize market expectations, Soochow Securities noted.  

Online sales also continued to support overall consumption thanks to new sales models such as livestreaming, Fu said. Online sales of goods in the first eight months increased 9.5 percent year-on-year, accounting for 26.4 percent of the retail sales of consumer goods during the period. 

Meanwhile, China has been continuously rolling out supportive policies and measures to bolster domestic consumption. In late July, China's top economic planner issued 20 measures to boost domestic consumption, including support for expanding real estate and auto sales. 

Going forward, Fu said that steady recovery in the consumption sector is expected despite some lingering challenges, as supportive policies further take effect and stable employment continues to boost residents' incomes, while elevating spending power and willingness.