Restaurant and retail consumption has taken a battering in China due to the country’s zero-COVID policy and related lockdowns.
Retail sales dropped by 11.1 percent year-on-year in April and 6.7 percent year-on-year in May, according to data from the National Bureau of Statistics.
National restaurant spending was down by more than 20 percent in April and May compared to the same months last year and dropped by four percent in June. In June, retail sales growth recovered somewhat, increasing by 3.1 percent, as mobility restrictions largely eased after lockdowns in Shanghai and other cities.
This comes as China’s GDP growth plummeted to only 0.4 percent in the second quarter of 2022 compared to the same period last year. This was the worst performance since the country first shut down in the first quarter of 2020, when COVID first began causing economic disruptions. Household income grew by 2.6 percent in Q2 2022, low by pre-COVID standards.
Weak domestic demand is the key factor in China’s comparatively low inflation – the consumer price index (CPI) increased only moderately from 2.1 percent year-on-year in March to 2.5 percent year-on-year in June, according to French investment bank Natixis. The producer price index (PPI) was also down from eight percent year-on-year in April to 6.1 percent in June.
Weaker domestic demand and a weaker yuan and stronger U.S. dollar also appear to be driving down appetite for imports. China’s imports grew only one percent year-on-year in June even as exports from China rebounded from 3.9 percent year-on-year in April to 16.9 percent year-on-year in May and 17.9 percent year-on-year in June.
Photo courtesy of Mark Godfrey/SeafoodSource
