China’s Economic Recovery Might Be Slower Than Expected

China reported two monthly indices today that are shedding some light on just how quickly China's economy is recovering. The short answer? Slower than expected. The National Bureau of Statistics is reporting 3.3-percent growth year-on-year for April in its consumer price index (CPI), which is a 1-percent drop from March’s CPI growth. Meanwhile, the producers price index (PPI) fell to -3.1 percent from -1.5 percent in April, indicating weaker demand, which has led to producers asking a lower gate price than normal. The main component that drove down the CPI in April is food, as its overall price went down by 3 percent, according to a statement from the Bureau’s Senior Analyst, Dong Lijuan. Within the apparel category, consumer prices for clothes and shoes decreased by 0.3 percent and 1.1 percent, respectively. Jing Take : Rome — or as they say in China, the Great Wall — wasn’t built in a day. Although local Chinese governments and retailers have been pushing digital vouchers, discounts, and even a month-long shopping festival resembling Singles’ Day in Shanghai, it will take time for stimulus measures like these to kick in. As the inflation rate continues to drop to pre-COVID-19 levels, people should soon be more encouraged to spend. But the shrinking PPI number is more concerning, since it doesn’t just show weak demand but is more connected to the rest of the pandemic-stricken world. In fashion, many public Western companies have already predicted a worse Q2 in their recent earnings calls, so Chinese manufacturers that are dependent on overseas orders might see even more trouble in the months to follow. Therefore, China's economy, which gleaned 38 percent of its overall earnings from international trade in 2018, will probably need to brace for further impact. The Jing Take reports on a leading piece of news while presenting our editorial team’s analysis of its key implications for the luxury industry. In this recurring column, we analyze everything from product drops and mergers to heated debates that sprout up on Chinese social media.

China’s Economic Recovery Might Be Slower Than Expected

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Published May 12, 2020

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China’s Economic Recovery Might Be Slower Than Expected