What happened
On July 15, China announced that its gross domestic product (GDP) in the second quarter increased by 7.9 percent from a year ago, which was slightly below the Reuters estimate of 8.1 percent for the period. This rate also grew more slowly than the 18.3 percent year-on-year growth rate during the first quarter, which jumped from a comparatively low base last year.
By category, retail sales recorded the most substantial surge, with a growth rate of up to 23 percent, year-on-year. June, in particular, saw a rise of 12.1 percent over the same period in 2020.
Liu Aihua, the spokesperson of China's statistical bureau, stated in a press conference that “in the first half of the year, China’s economy continued to recover steadily, production demand continued to rise, employment and prices were generally stable, new drivers grew rapidly, quality and efficiency constantly improved, and the overall market performance tended to be positive.”
The Jing Take
A post-COVID-19 slowdown after China’s V-shaped economic rebound is now indisputable, according to analysis and the data released by the government. Although retail sales saw a robust surge during June, market players must understand those numbers were primarily driven by China's middle-year shopping festival. As such, China's rebound status is cloudy and uncertain.
On the one hand, health concerns about future COVID-19 outbreaks in China remain, as clusters of infections have continued to pop up in different regions. But on the other hand, employment, incomes, and investments in many sectors have returned to their pre-COVID levels.
Still, the consumer confidence and buying power of China’s high-net-worth individuals (HNWIs) will be more resilient than those of other consumer groups. This demographic remains the key growth engine for luxury brands focusing on China, despite new signs of economic sluggishness.
The Jing Take reports on a piece of the leading news and presents our editorial team’s analysis of the key implications for the luxury industry. In the recurring column, we analyze everything from product drops and mergers to heated debate sprouting on Chinese social media.