Preface

In recent months, signs of recovering consumer spending in China have emerged, indicating economic resilience post-pandemic despite challenges. This article examines the earnings reports from key companies and highlights critical developments in consumer confidence. With the Chinese government emphasizing the importance of consumption as a priority, various policy measures are being implemented to stabilize and boost the market. We'll explore the impact of these measures and the current economic climate shaping China's consumer landscape.

Lazy bag

The rebound in Chinese consumer spending is evident but hasn't reached pre-pandemic highs. Companies are seeing modest growth influenced by government policies, yet challenges persist in restoring consumer confidence.

Main Body

Recent data and corporate earnings reports illustrate a steady recovery in China's consumer spending, although it's yet to return to the robust levels seen before the pandemic. Major e-commerce players like Alibaba and JD.com have reported an uptick in revenue growth, showing a year-on-year improvement in their China retail operations for the last quarter of 2024. However, growth rates still fall short of past highs.

According to Charlie Chen from China Renaissance Securities, while the China consumption growth is in a healthy recovery, it hasn’t reached previous levels. The economic slowdown primarily affects consumer confidence, dampened further by a prolonged slump in the real estate sector, impacting perceived wealth among consumers.

On the policy front, the Chinese government has introduced various measures to spur consumption. This includes expanding trade-in subsidies to cover electronic gadgets and a strategic shift in real estate policies to halt the sector’s decline. JD.com, one of the beneficiaries of such policies, experienced significant sales growth in electronics and home appliances, although the pace moderated compared to the early years of the pandemic recovery.

Similarly, Tencent has shown stable growth in fintech services, catering to the stable demand for commercial payment services. However, when juxtaposed with the stellar growth in earlier years, the pace appears more restrained.

On the other hand, niche market players like Laopu Gold and Pop Mart have shown that specific segments of Chinese consumers continue to spend robustly, as evidenced by their impressive profit margins. These successes highlight a fragmentation in consumer behavior, where certain premium products or uniquely Chinese offerings gain traction despite broader economic challenges.

The broader economic outlook remains cautiously optimistic. Official data shows modest improvement across various sectors, and retail sales have seen their highest growth in recent months, albeit on a high comparison base. Yet, a comprehensive recovery requires further support, particularly in areas of discretionary spending and services where growth potential remains significant.

Market players continue to adapt; travel services like Trip.com capitalize on revived international travel, a segment outperforming domestic prospects. This optimism mirrors broader market practices, despite the intense competition and price cuts prevalent in certain sectors, such as electric vehicles and retail outlets struggling against online discounting trends.

Ultimately, China's consumption landscape is marked by a blend of recovery and resilience across its diverse market spectrum. Despite overarching challenges, companies remain hopeful about the future of consumer sentiment, provided there is sustained support from government policies and market innovations.

Key Insights Table

Aspect	Description
Consumer Spending Recovery	While improving, it's not back to pre-pandemic levels.
Policy Measures	Introduction of subsidies and real estate policies to stimulate market activity.
Market Fragmentation	Selective spending in niche areas drives uneven growth.
Economic Outlook	Signs of recovery exist, but require continued support for sustained growth.

Last edited at：2025/3/27