China's retail sales up 8.2% in 1H23 from COVID-low base: Fitch

10 Aug '23

2 min read

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Insights

China's retail sales increased 8.2 per cent YoY in 1H23 from a low COVID-19 affected base, with an expected high-single-digit rise this year, as per Fitch Ratings.
Bigger growth potential is predicted in percentage terms for e-commerce in rural markets than in urban areas.
Rural consumption represented 13.2 per cent of retail sales in 1H23.

China’s retail sales rose by 8.2 per cent YoY in the first half of 2023 (1H23), albeit from a low base in 1H22 which faced severe disruption from COVID-19-related controls, as per Fitch Ratings. The base case continues to assume that total retail sales will increase by a high-single-digit this year, with uneven recovery trajectories across categories.

Delivery logistics providers could benefit from the latest push to promote consumer spending and improve delivery services in rural markets. Express delivery services have been less available in rural areas, due to business concerns over lack of economies of scale and higher average costs. Still, rural consumption accounted for 13.2 per cent of nationwide retail sales in 1H23, while the proportion may even be understated due to the statistics bureau’s limited coverage of small retailers in rural areas, Fitch Ratings said in a press release.

Bigger growth potential is predicted in percentage terms for e-commerce in rural markets than in urban areas, given the faster increase in retail sales and per capita disposable income, although it will be off a smaller base.

The plan also reiterates the expansion of public real-estate investment trusts (REITs) to cover consumer-related infrastructure assets, such as shopping malls and department stores. The measures may provide additional financing for consumer-oriented infrastructure projects, although the commercial REIT market is nascent and with no issuance so far in China.

Fibre2Fashion News Desk (NB)

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