Table of Contents

• You might want to know


• Main Topic


• Key Insights Table


• Afterwards...

You might want to know

Why did growth during the 618 shopping festival slow markedly compared with last year, and what sectors are holding up or weakening within China’s consumer market?

Main Topic

In June, China’s consumer spending continued to show signs of weakness. One of the clearest illustrations of this trend came from the nation’s large mid-year e-commerce promotion period, commonly known as the "618" shopping festival, where aggregated online sales expanded at a much slower pace than in the previous year. According to retail tracking data, total online sales between May 13 and June 18 rose by only 4% year-on-year, a significant deceleration from the roughly 15.2% growth recorded during the prior festival. This moderation reflects broader softness in household demand even as other parts of the economy—such as exports and some technology segments—display relatively stronger performance.

Retail activity outside of the festival reinforced the same picture: retail sales in May registered a year-on-year decline of 0.6%, the first drop since China emerged from pandemic-related restrictions in 2022. These data points suggest that consumer spending remains a notable weak spot for the economy and has not yet returned to more robust expansion despite stimulus and promotional efforts deployed by platforms and merchants.

Analysts point to a widening divergence within the economy. On one side, high-tech and AI-related sectors continue to attract investment, show stronger production data, and buoy certain parts of capital markets. On the other, traditional sectors tied to property and broad household consumption continue to lag. This split was summarized by a major investment bank which highlighted that industrial production and capital markets are reflecting separate dynamics for advanced tech and property/consumption segments. Such divergence complicates policy responses because gains in technology do not automatically translate into broad consumer recovery.

Macroeconomic forecasts were modestly revised downward as a result of these trends. One global bank trimmed its estimate for second-quarter real GDP growth to 4.5% year-on-year from an earlier 4.7%, though its full-year projection remained unchanged. The forecast adjustment reflects weaker-than-expected household demand and a recognition that consumption improvement is likely to be uneven and gradual.

The 618 festival offers a concentrated snapshot of consumer behavior because it aggregates many types of purchases across large platforms. In the recent period, e-commerce tracking firm estimates put total 618 sales at about 934 billion yuan (roughly $138 billion), a figure that included same-day delivery and group-buying orders. Platform-level performance showed familiar leaders: Alibaba’s Tmall topped the rankings, followed by JD.com and Douyin (ByteDance). But growth within the e-commerce segment was muted—reported at around 0.9%—indicating that while volume remains large, pace-of-growth momentum has slowed considerably.

Within categories, shifts in consumer preference were evident. Preowned electronics saw strong expansion during the festival period: a specialized resale platform reported nearly 80% year-on-year growth for refurbished devices, signaling heightened sensitivity to price and value among shoppers. This trend toward lower-cost or value-oriented purchases is consistent with the broader consumption slowdown.

Last year’s online retail activity had benefited from government incentives and trade-in subsidies that boosted sales of home appliances and new devices. That stimulus effect was much less visible in the recent festival. Instead of the dramatic, subsidy-driven surges seen previously—such as the 400% increase in certain household appliance categories—spending this year tilted toward services like home cleaning as well as discretionary lifestyle categories. Industry observers noted stronger performance in fashion, lifestyle, beauty, and health supplements, suggesting that consumers who are spending may prioritize personal care and experiences.

Another notable development is the rise in demand for AI-related hardware and the broader integration of AI tools into e-commerce platforms. Merchants and platforms are increasingly using AI to personalize recommendations, improve conversion rates, and optimize logistics, which can translate into higher margins for brands. Still, the macroeconomic implications of AI growth are complex: while AI can boost productivity and create new product demand, it may also accelerate structural shifts in labor markets. Some analysts warn that potential job displacement from automation could increase downward pressure on household incomes and weigh on recovery in property and consumption sectors.

Overall, the subdued growth in the 618 festival underlines a cautious consumer environment. Promotional activity and platform competition remain robust, but they have not been sufficient to restore growth to last year’s levels. The persistence of these trends suggests that policymakers and businesses will need to monitor both short-term demand signals and longer-term structural changes driven by technology and demographic shifts. The recovery path for Chinese consumption may therefore be uneven, characterized by pockets of strength in high-tech and lifestyle categories but continuing weakness in broader household spending indicators.

Key Insights Table

Afterwards...

Looking forward, policymakers and corporate strategists will likely focus on measures to stimulate durable consumer demand while balancing support for technological advancement. Monitoring spending patterns across price points and categories will be vital to gauge whether value-seeking behavior is a transitory response or a longer-term shift. Continued investment in AI and high-tech sectors may produce efficiency gains and new product categories, but the broader recovery in household consumption will depend on labour market resilience, income growth, and confidence in property market stability. In sum, China’s consumption outlook appears mixed: pockets of dynamism exist, yet a broad-based rebound will require sustained improvement in household finances and sentiment.