Chinese consumption downgrade, home prices decline worse than official figures suggest
Trying to make sense of things
*This is a premium-only post. Thanks for being a subscriber, it means a lot.
China’s households are downgrading their consumption (section 1). Likely because their incomes are depressed or stagnate (previously covered here) and they are seeing home price declines that are worse than official data (section 2).
"The difficulty lies, not in the new ideas, but in escaping from the old ones." - John Maynard Keynes
I. Consumer downgrade signals
July’s retail sales came in at CNY 3.6 trillion, up 2.5% year-over-year, below 28 of the 29 surveyed estimates (4.0% mean). NBS provided seasonality adjusted MoM change of -0.06%, non-seasonally adjusted MoM was down 8.0%.
In terms of categories, the weakest were in durables, suggesting consumers are being thrifty on larger ticket items. Note: there are issues with NBS’s categories because they only include larger companies, read more in our Indicator Dive on Retail Sales.
On their Q2 earnings call yesterday, JD.com said their low prices for appliances helped them gain market share (1), which is evidenced by their strong growth (2) in home appliances and mobile phones in Q2.