Chinese spending power on rise despite growth slowdown

Irish Sun Thursday 19th January, 2012

HONG KONG - The slowing down of China's economy has not stopped retail-spending growth and the emergence of a new class of super consumers in one of the world's largest economies, according to latest data.

Retail sales for December have grown by 18.1 per cent from a year earlier, accelerating from November's 17.3 per cent rise, according to the National Bureau of Statistics data.

The study on nationwide pre-holiday spending released earlier this week shows that mainland Chinese consumers were out in force in the run up to Chinese New Year festival.

If the figures are adjusted according to inflation growth, spending shows a growth of 13.8 per cent in December, picking up from a 12.8 per cent rise in November.

The data shows mainland consumers have not lost their stride even as the economy slowed, says Standard Chartered's Stephen Green in Shanghai.

"If accurate, these numbers indicate that the negative effects of inflation are fading, and that China's consumers are continuing to spend," Green said in a note after the NBS's release.

He however says that conversations with multinational clients had revealed a growing gap between their experience and that of local retailers. He observes that local retailers were glummer and were generally reporting a clear slowdown in fourth-quarter activity, according to Marketwatch.com.

But, he added, there's good reason to remain upbeat, pointing to rising household income, as salaries rise and inflation cools.

The trend towards higher wages should continue this year, as manufacturing-related industries boost salaries by 10 per cent on average, while consumer inflation is likely to soften to around 2 per cent, according to Standard Chartered estimates.