China’s total retail sales decreased for the first time in five months in October despite a good performance of its online retail market. This reflects an already weak domestic demand.
Data released by China’s National Bureau of Statistics this week showed that total retail sales of consumer goods fell 0.5% year-on-year in October, the first decline since May.
The October drop dragged down the retail sales for the first ten months of this year to just 0.6% growth.
The decrease reflected an overall weak purchasing power in the domestic market, though the October data was supported by online sales.
In the first ten months, China’s online retail sales was up 7.2%, outstripping the 6.1% increase in the first nine months of the year.
The online retail sales of physical goods accounted for 26.2% of the total retail sales of consumer goods in the period.
The Chinese government did not publish monthly data for online retail sales for October alone. But according to the Wall Street Journal, analysts at financial institutions Citi, Jefferies and Nomura calculated that China’s online retail sales surged 15% in October.
This is the first month this year the country’s online retail sales increase more than 10%.
However, analysts believe that the euphoria in China’s online retail market could be extinguished soon.
According to analysts, one reason for the online retail sales party in October is that this year’s Singles’ Day e-commerce shopping festival started earlier than usual. This largest annual online shopping promotion in China usually takes place around Nov. 11 each year.
This year, many e-commerce platforms, such as Alibaba’s Tmall, allow consumers to settle payments in October, compared with November last year.
In addition, recent outbreaks of Covid-19 and partial lockdowns in various parts of China may have led to more consumers shopping online than normal.
But Citi analysts said that the binge may be short-lived, and China’s online sales figures for November could be quite weak.
Regarding China’s domestic demand, some economists believe that the situation is unlikely to improve before the end of the year. They claim that the Chinese government does not seem to intend to completely lift the COVID pandemic prevention restrictions in the short term.