China Enjoys ‘Incremental Rebound’ in Consumer Spending

Consumer spending in China is slowly but surely recovering from COVID.

“We’re seeing the incremental rebound from the Chinese consumer,” KraneShares Chief Investment Officer Brendan Ahern told CNBC in a report published Saturday (May 27).

However, Ahern cautioned that the recovery was “not like turning on a light switch.”

The report cites findings from the National Bureau of Statistics of China, which says retail sales have been on the rise since last November.

Ahern told CNBC he expects quarterly earnings for Chinese companies to improve with each consecutive quarter — a trend that could already be underway, as companies like Baidu and Tencent exceeded expectations during their fiscal first quarters.

“We’re actually hearing that for many of the companies … in the management calls, they’re speaking to how Q2 already is outpacing Q1, which outpaced Q4 of last year,” Ahern said.

The news comes weeks after China’s National Bureau of Statistics released data showing the country’s economy growing 4.5% during the first three months of the year thanks to a rise in consumer spending.

As PYMNTS reported, retail sales of consumer goods increased 5.8% year over year after a 2.7% drop during the previous quarter as shoppers upped their spending on everything from clothing to food to jewelry.

Online retail sales rose 8.6%, the statistics bureau said, making up close to a quarter of all retail sales during the opening months of the year.

As PYMNTS has written this year, a number of American companies have been banking on China’s recovery to boost their own fortunes, with retailers like Starbucks and McDonald’s looking to the region to open new locations.

“I remain more confident than ever that we are still only in the early chapters of our growth story in China,” Howard Schultz, Starbucks’ interim chief executive, said in February.

The country has been especially good to some luxury brands. For example, premium label Ralph Lauren has disclosed plans to open 55 new locations, primarily in China. 

And noted here earlier this month, Estée Lauder, the parent company of cosmetic brands such as MAC and La Mer, said that despite an anticipated decline in sales, it remained enthusiastic about China.

The company said it expects sales in Asia to grow in the fourth quarter, while L’Oréal, the world’s biggest beauty company, has forecast a revival in demand among consumers in China for the ongoing quarter.