Is this the much-vaunted (and longed-for in the West) economic downturn? China Retail Sales Remain Still Strong at 7.2% Growth. However…

… Further breakdown is needed to understand what’s really going on.

FEB 13

Wishing everyone a happy healthy and prosperous Year of the Dragon.

Here is the breakdown, from my perch in Shenyang on the Chinese retail consumer with average growth now still coming in at a strong 7.2%.

Of course that’s excellent; however, it requires a further breakdown of what’s happening on the ground.

1. Lower/middle income Chinese households overall are still struggling post pandemic.

Many of them had their savings drastically reduced and lost their small shop retail businesses.

I can confirm this directly, as I have spoken to countless local shop retailers/restaurants here in Shenyang which well represents the 2nd, 3rd and 4th tier economy. Business is still down and they are struggling.

This is a large % of the household population, around 60% of the urban populations.

2. Upper middle income spending is fine and strong. 

This category is an expanding population exactly as McKinsey had predicted years earlier, around 30% of urban population earning nice money with low cost of living nationwide thanks to the Chinese governmental policies avoiding the nasty inflation which has been further destabilizing western country lower/middle class households.

They still have plenty of savings and are in the large market of better professional level jobs.

This category is hugely successful and this is where the robust 7.2% growth is rooted.

They are carrying the water of still healthy strong consumer retail spending.

3. Figures for the 4 major 1st tier cities don’t count.

What’s happening in Shanghai, Shenzhen, Guangzhou and Beijing is not indicative of the rest of the country.

It’s what’s happening in the other 100 plus 2nd, 3rd and 4th tier cities that tell the larger story.

By the way I’m certainly not defending any of these ridiculous western media outlets reporting negatively on China. They’re despicable and consistently inaccurate. Cheers