This year's "618" mid-year shopping festival in China saw a sharp slowdown in online sales growth, once again highlighting the structural pressure on domestic consumption to remain weak. According to the latest statistics from retail data agency Syntun, during the "618" promotion period from May 13 to June 18 this year, the total online sales of China's entire network of e-commerce increased by only 4% year-on-year, far lower than the 15.2% growth rate in the same period last year. This latest data echoes official statistics that previously reported a decline in retail sales growth, showing that while exports and technology-related industries are performing relatively solidly, consumer spending in the household sector is still a weak link in the Chinese economy.
Official data shows that China's total retail sales of consumer goods fell by 0.6% year-on-year in May this year. This is the first year-on-year decline in retail sales since the withdrawal of epidemic prevention and control measures in 2022. Shine Hui, chief China economist at Goldman Sachs, pointed out in a research report that from the perspective of industrial production and capital market performance, "the differentiation between high-tech and artificial intelligence-related sectors and real estate and traditional consumer fields is further widening." The report also cited recent intensive local surveys and policy statements by senior officials, saying that the current judgment that "structural differentiation will continue" is gradually forming a consensus at the decision-making and market levels.
In its latest forecast, Goldman Sachs lowered its forecast for China’s second-quarter real gross domestic product (GDP) year-on-year growth to 4.5% from the previous 4.7%, but maintained its full-year growth forecast of 4.7% unchanged. The agency believes that exports and high-tech manufacturing will still provide some support to the economy, but real estate adjustments and weak consumption will continue to drag down the overall momentum.
As an important window for observing consumption intentions, the performance of the “618” Shopping Festival has received close attention from the market. Seton's statistics show that under the calculation of omni-channel orders including "same-day delivery" instant delivery and community group buying, China's total online retail sales during this year's "618" period were approximately 934 billion yuan (approximately US$137.86 billion). Among the major e-commerce platforms, Alibaba’s Tmall ranks first in terms of transaction volume, followed by JD.com and ByteDance’s Douyin e-commerce, but the overall sales growth rate of related categories is only 0.9%.
Against the backdrop of rational consumption, second-hand platforms have performed outstandingly. ATRenew, a second-hand digital trading platform, said that during this year’s “618” period, its second-hand product sales increased by nearly 80% year-on-year, highlighting that consumers’ preference for low-price and cost-effective products is increasing. Industry insiders pointed out that China’s online retail sales experienced a short-term surge in the past year driven by government subsidies, especially the “trade-in” subsidy to promote the replacement demand for durable consumer goods such as home appliances.
However, the consumption structure has changed significantly this year. Jacob Cooke, co-founder and CEO of WPIC, cited data disclosed by JD.com and pointed out that unlike previous years, which relied on high subsidies to drive home appliance sales to achieve a rapid growth of about 400%, during this year's "618" period, consumer demand for services such as home cleaning was extremely active. He said on the CNBC program "The China Connection" that the outstanding performance of categories such as clothing, lifestyle, beauty and health products reflects that while consumers are controlling large expenditures, they are still willing to invest more in image management and health-related daily consumption in order to "take care of themselves better and be more willing to go out and experience life."
At the same time, the sales of artificial intelligence-related hardware products and the application of AI tools by e-commerce platforms are also growing rapidly. Cooke pointed out that more and more online platforms are using AI to improve operational efficiency, optimize product recommendation and inventory management, thereby helping brands improve profit margins in an environment of slowing overall growth. However, there is still great uncertainty surrounding the macro impact of AI, and some institutions are beginning to be wary of the new round of employment pressure it may bring.
Goldman Sachs warned in the report that the popularization of artificial intelligence technology may trigger a certain degree of job replacement, thereby exacerbating macro-level headwinds and further delaying or even disrupting the recovery process of the real estate market and household consumption. The bank believes that if the structural unemployment or expected decline in income caused by AI cannot be effectively hedged, residents' spending on housing and optional consumption may continue to be under pressure. While exports and technology industries are relatively strong, how to stabilize employment, income, and confidence is becoming a key question that the Chinese economy must face in the "post-epidemic era."