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China retail sales growth slows, as consumers fret

China retail sales growth slows, as consumers fret

China's retail sales slowed slightly in the first two months of the year, as consumers fretted over job security and the faltering economy, though a push to boost spending in rural areas appeared to be taking hold.
China is spending several hundred billion dollars to stimulate consumer spending and counter the impact of a slump in exports. It needs to keep shoppers spending, especially in the countryside that is home to more than half its 1.3 billion people.
As China's economy has slowed, retail sales have lagged the deterioration in other indicators, rising by double-digit figures each month and surging more than 20 percent for several months last autumn.
While some indicators signal the economy may be stabilizing, the data reported Thursday suggest the consumer is beginning to catch up with the gloom.
Retail sales in January-February totaled 2 trillion yuan ($294 billion), up 15.2 percent from a year earlier but down from 17.4 percent growth in December and 20.2 percent a year earlier, the National Bureau of Statistics said in a statement on its Web site.
China did not report separate figures for each of the first two months, citing potential distortions from the Lunar New Year holiday, which fell in February last year and in late January this year.
Consumers are growing increasingly uneasy over the economic outlook, researchers say.
"We will see sluggish consumption in coming months and it will get worse," said Andy Xie, an independent economist based in Shanghai, citing a negative "wealth effect" from job cuts, ailing share prices and the struggling property market.
A Shanghai-based market research group, DDMA, said in a survey released this week that 45 percent of those it polled in February had cut back on spending, up from 38 percent in January.
"Economic concerns are now very much ensconced at the top of the list of most important consumer concerns," the group said in a statement. "The February data suggests that the Chinese consumer market has reached a tipping point," it said.
The survey of 602 people aged 25-45 was conducted mainly in big cities and reflected the sentiments of relatively high-earning middle class consumers, the group said. It said 12 percent of those responding had lost their jobs, up from 3 percent in January.
While upwardly mobile young Chinese have relatively large amounts of disposable income, many are employed in industries feeling the brunt of the export slowdown, which has prompted companies to cut jobs, shrink bonuses and otherwise reduce spending, it noted.
The bulk of China's consumer spending, or 67 percent, is still in the cities, according to the statistics bureau data. But urban retail sales grew 14.4 percent in January-February from a year earlier, while rural sales climbed 17 percent.
Spending on housing and food remained relatively strong, growing nearly 19 percent. Sales of furniture jumped 27 percent, while construction and building decor materials rose 22 percent, the bureau said.
Sales of communications devices, such as mobile phones, fell 9 percent.
Along with a 4 trillion yuan ($586 billion) economic stimulus package, China has announced a slew of measures aimed at encouraging higher spending by families in the countryside, including tax cuts and subsidies for purchases of electrical appliances and small cars.
It is unclear how much impact those measures are having so far. Details of the auto sales subsidy program have yet to be announced, although an industry group reported earlier this week that car sales surged 25 percent in February from a year earlier.
The statistics bureau reported that spending on appliances and audiovisual equipment, however, rose only 2.7 percent in January-February.


Updated : 2021-02-26 20:49 GMT+08:00