A strong surge in consumer spending on retail is likely to be the main economic driver in China as the country recovers from the effects of the pandemic, the Financial Times (FT) reported.
The evidence could be seen robustly during and around the country’s Singles’ Day event Nov. 11. The event was originally conceived as a way for Chinese single people to splurge on shopping and has now become an annual mass-spending event showing China’s expanding finances and its burgeoning eCommerce market.
This year, FT reported, the event morphed into an 11-day spree, and consumers spent $75.8 billion in orders. That’s a 26 percent increase from the same time in 2019.
The numbers come during a year which has seen retail growth lagging behind the industrial production that has helped China start to recover from the pandemic. However, consumer spending is beginning to catch up, FT reported, with retail sales rising 4.3 percent in October while industrial growth was up 6.9 percent.
A Morgan Stanley forecast also said that personal consumption would be the primary catalyst for growth in China in 2021, ousting exports and investments in infrastructure, FT reported.
“You have a lot of excess saving by Chinese consumers for this year,” said Robin Xing, chief China economist at Morgan Stanley, according to FT. “We expect this excess saving will be partly released in 2021 as consumer confidence likely improves.”
However, consumer activity across various sectors in China is still uneven due to the vast impacts of the pandemic. Tourism, for instance, is much further away from a full recovery than eCommerce is, FT reported.
China, which faced the first lockdowns this year as the pandemic began, has been working toward recovery in recent months. PYMNTS reported in October that the pandemic was mostly under control in the country and its economy is set to grow around 2 percent this year, according to officials.
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