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China’s headline macroeconomic data in October provided further evidence of the gentle rebound in growth that our indicators and on-the-ground investigations have suggested over the past month. With inflation continuing to moderate, we expect the rebound to deliver faster YoY GDP growth in 4Q12 than the 7.4% YoY GDP growth recorded in 3Q12, bringing full-year GDP growth to around 7.7%-7.8%.
A growing legion of increasingly sophisticated consumers in China’s booming county cities and townships looks set to drive Chinese consumption growth in the coming years, according to China Confidential’s survey of 386 residents in 11 counties across the country.
For home appliance makers struggling amid weakening domestic demand and waning export orders, the government’s latest initiative to stimulate China’s slowing economy could hardly have come at a better time.
With consumer spending slowing and aggressive expansion heightening already stiff competition in many leading cities, 2012 promises to be a challenging year for leading department store chains
China’s GDP growth slowed to 8.1% YoY in 1Q12 from 8.9% YoY in the previous quarter. Industrial output rose 11.9% YoY, an uptick on the 11.4% YoY growth in the combined January-February period; fixed-asset investment (FAI) was up 20.9% YoY, 0.6pp slower than in Jan-Feb; while retail sales grew 15.2% YoY, faster than the 14.7% YoY growth in Jan-Feb. Despite the slowest annual GDP growth rate for 11 quarters, we believe that the 1Q12 numbers are consistent with a “soft landing” scenario and in line with China Confidential’s forecast range of 8% to 8.5% GDP growth in 2012 (CC Dec 22 2011 Macro View). We saw signs that economic growth picked up somewhat in March MoM (CC Apr 5, Macro View) after a slowdown during the first two months of the year.
Bankcard spending showed a slight increase in March on both a MoM and a YoY basis, indicating continued robust consumer confidence, according to a leading third-party indicator.
Despite the symbolic lowering of China’s 2012 GDP growth target to 7.5%, we continue to expect growth of 8-8.5% YoY this year.
Cost of living growth slowed in February according to our latest consumer survey, strengthening our expectations that China’s consumer price index likely fell MoM and moderated YoY in February
The 7.5% GDP growth target outlined by Chinese premier Wen Jiabao in his annual address to the National People’s Congress is in line with previous official predictions of slower growth in 2012
China’s Bankcard Consumer Confidence Index, a measure of cardholder spending on non-essential items, picked up just 0.05 percentage points from June to 86.11% in July, China UnionPay which compiles the index said. The reading, which still remains below levels seen in 1Q11 and last year, is in line with findings from China Confidential’s July Consumer Sentiment Indicator which showed a slight recovery in discretionary spending in July following a slowdown in June.
11 Sep 2014
