Retail in Asia


China’s retail sales made a shaky comeback in Q3 2022

A worsening real estate crisis, Covid-19 restrictions, and the risk of a global recession has held back China’s third-quarter economic recovery, according to data released by the Chinese government.

However, some aspects of the Chinese economy are particularly promising. In September, industrial production data – a measure of activity in the manufacturing, mining, and utility sectors – showed a sharp rise from the previous year. The Chinese property market downturn has worsened, export growth has slowed further, and consumer spending has declined again after a brief rebound in the summer. Other sectors have not performed as well.

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In the July-September quarter of 2022, the world’s second-largest economy recorded a 3.9 percent increase in gross domestic product (GDP) over the same period last year, according to official data released by the National Bureau of Statistics (NBS). As predicted by some previous analyses, the pace of growth was 3.4 percent, a pace that exceeded the pace recorded in the second quarter of 0.4 percent.

In the third quarter of 2022, all three sectors of the economy experienced growth: The value added of the tertiary industry was RMB 46,530.0 billion, an increase of 2.3 percent.

In the third quarter, industrial production rebounded significantly from the first quarter, with the strongest recovery registered in September.

Compared to the first half of the year, the value-added output of industrial enterprises over a designated size (those with an income of RMB 20 million (USD 2.9 million or more) increased by 3.9 percent year-on-year, 0.5 percentage points faster. As compared to 2021, the value added in high-tech manufacturing and equipment manufacturing increased by 8.5 percent and 6.3 percent, respectively.

The purchasing manager’s index for manufacturing (PMI) rose to 50.1 in September from 49.4 in August. A reading in excess of 50 indicates the manufacturing sector has expanded or grown. This is also the first time it has improved since July 2022.

Retail sales experienced a shaky comeback in the third quarter, declining slightly to 2.7 percent in July, before increasing to 5.4 percent in August and then dropping to 2.5 percent once again in September. Several analyses suggest that the trend was partly the result of fluctuations in numbers between June and September that were influenced by macroeconomic conditions and the resurgence of Covid-19 cases. Throughout the first three quarters of 2022, retail sales grew by only 0.7 percent.

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Based on consumption patterns, sales of goods reached RMB 28,905.5 billion (USD 4,008.9 billion), a 1.3 percent increase from 2021, while catering revenue was RMB 3,124.9 billion (USD 433.9 billion), a significant decrease of 4.6 percent. This drastic drop in catering sales is primarily due to the measures adopted by the zero-Covid and dynamic clearing policy, which have particularly impacted this sector.