China’s consumer spending on services and in smaller cities to pace growth, e-commerce giant JD.com says

Consumers in smaller cities spend most of their income on essential items, leaving room for increases in discretionary spending if incomes rise

Consumption contributed to more than 60 per cent of Chinese growth in the first three quarters of 2019, but has been under pressure during the trade war

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Private consumption, which accounted for more than 60 per cent of Chinese growth in the first three quarters of 2019, has been under constant pressure during the 18-month-long trade war. Photo: EPA

Published: 9:30pm, 17 Dec 2019Updated: 3:31pm, 20 Oct 2020

China’s retail sales have not yet shown signs of a rebound, but rising service consumption and the potential for a significant increase in spending in smaller cities as incomes rise could rapidly reshape the country’s consumption landscape, according to a report released on Tuesday.

Consumption, which contributed to more than 60 per cent of Chinese growth in the first three quarters of 2019, has been under constant pressure during the 18-month-long trade war.

But the results from JD Digits Research Institute, analysing spending habits based on data from JD.com, one of the country’s leading e-commerce platforms, painted an upbeat picture for consumer spending and supported the view expressed recently by Beijing officials that growth has been better than expected even before the phase one trade deal with the United States was announced.

That, in turn, reinforced the repeated message from the government that major economic stimulus it unnecessary to support stable growth next year.

Signs of a slowdown in spending triggered a debate on whether the country’s 300 million middle class consumers were “downgrading” their consumption to save money amid the economic slowdown due to fears about their job security and income.

China’s consumer spending on services and in smaller cities to pace growth, e-commerce giant JD.com says

Consumers in smaller cities spend most of their income on essential items, leaving room for increases in discretionary spending if incomes rise Consumption contributed to more than 60 per cent of Chinese growth in the first three quarters of 2019, but has been under pressure during the trade war

Consumers in smaller cities spend most of their income on essential items, leaving room for increases in discretionary spending if incomes rise

Consumption contributed to more than 60 per cent of Chinese growth in the first three quarters of 2019, but has been under pressure during the trade war