China’s 618 shopping festival growth slows sharply as consumer spending malaise persists

BEIJING — The slowdown in China’s consumer spending continued in June; Growth at one of the country’s biggest online shopping festivals is down sharply from a year ago.

Total online sales during the annual “618” shopping event from May 13 to June 18 were up 4% year-on-year, a sharp decline from the 15.2% growth recorded at the festival last year. retail data company Syntun he said late Monday.

The figures add to signs that household spending remains a weak spot in China’s economy, despite a strong performance in exports and technology-related sectors.

Retail sales fell 0.6% in May from a year ago; this was the first decline since China emerged from pandemic restrictions in 2022.

“The gap between high-tech/AI and property/consumption continues to widen in both industrial production and capital markets data,” Hui Shan of Goldman Sachs said in a note Monday. he said.

“Senior leaders’ domestic travel, recent policy communications, and our channel checks on the ground all suggest these trends will continue.”

The firm lowered its forecast for second-quarter real GDP growth to 4.5% from the previous forecast of 4.7% a year earlier, while keeping its full-year outlook unchanged at 4.7%.

The 618 shopping festival offered one of the last glimpses of consumer demand, with spending growth remaining weak despite promotional efforts by major retailers.

Syntun’s 934 billion yuan ($137.86 billion) estimate included same-day “instant” delivery orders and group purchases.

Among e-commerce platforms, Alibaba’s Tmall is ahead in sales, followed by JD.com and ByteDance’s Douyin, but the segment saw only 0.9% sales growth, according to the Syntun report.

Second-hand electronics platform ATRenew said sales of second-hand items were up nearly 80% in 618 shopping periods compared to a year ago, underscoring the demand for low-cost products.

China’s online retail industry got a boost last year from government subsidies that encouraged consumers to replace old electronics with newer models.

Spending patterns have changed this year. Jacob Cooke, co-founder and CEO of WPIC, said demand for home cleaning services has increased this year, instead of the 400 percent subsidy-driven growth in home appliance sales seen during the previous 618 shopping festivals. Figures announced by JD.com.

“Fashion has done well, lifestyle, beauty and health supplements have done really well as well. So people are taking care of themselves, they’re looking good, and they want to go out and experience the world,” Cooke said Friday on CNBC’s “The China Connection.”

He also stated that the demand for artificial intelligence-related hardware has increased and the increasing use of artificial intelligence tools on online shopping platforms has increased the profit margins of brands.

But the broader economic impact of AI remains unclear.

“AI-driven layoffs could amplify macroeconomic volatility and delay, if not derail, the recovery in the housing market and household consumption,” Goldman’s Shan said.