Shanghai – China’s biggest city – posted a 9.4 per cent slump in retail sales last month, its worst monthly figure since a two-month pandemic lockdown in the spring of 2022 and an indicator that domestic consumption remains weak in the country’s financial hub.
While retail sales growth dropped across all categories in June, a 13.5 per cent fall in sales of daily necessities and durables was the primary driver of the decline, according to data from the Shanghai Statistics Bureau.
The city’s retail sales underperformed the national level significantly, as the figure for the whole country in June was a 2 per cent increase according to data from the National Statistics Bureau – itself a less severe slowdown, as a rate of 3.7 per cent growth was reported in May.
The city’s consumption has been sluggish this year after a boom period following the removal of pandemic restrictions. Retail sales growth has been negative since February, with the exception of May’s 1.6 per cent bump.
Last month’s drop-off was the largest since June 2022, when the city gradually recovered from a prolonged Covid-19 lockdown.
“Shanghai’s overall performance in the first half was worse than that of the neighbouring Yangtze River Delta,” said Peng Peng, executive chairman of the Guangdong Society of Reform think tank. “I suspect the retail sales slump was primarily driven by bad sales of big-ticket items such as automobiles and houses.”
Shanghai’s food consumption dipped slightly by 1.7 per cent year on year in June, while clothing sales decreased by 5 per cent. Sales of fuel, including petroleum and gas, declined by 4.7 per cent.
During the five-day Labour Day holiday in May, local consumption in Shanghai was boosted by over 53 billion yuan (US$7.3 billion) according to state media outlet Guangming Daily, accounting for 33 per cent of the entire month’s retail sales.
The city’s gross domestic product, meanwhile, grew by 4.8 per cent in the first half of the year, slightly trailing the nation’s 5 per cent growth rate. National capital Beijing outpaced both with a 5.4 per cent expansion.
Those involved with affected industries are keenly aware of the slump. Gavin – a pseudonym – works at a high-end whiskey bar in Shanghai, where a 75ml glass of the spirit costs around 120 yuan (US$17). Most of his regular customers are locals, and business has been lacking this year.
“Many of our loyal customers have left Shanghai, some have gone to New York to make money,” Gavin said. “The customers who remain are mostly young people who prefer to share drinks at nightclubs and order cheap cocktails. They don’t come to places like ours.”
In the first half of 2024, retail sales in Shanghai dropped by 2.3 per cent year on year to 916.6 billion yuan. By comparison, the nation’s total retail sales for the same period rose 3.7 per cent year on year to 23.6 trillion yuan.
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