Positive economic trends in China tempered by caution
Auto, online sales drive consumption, but Trump looms large
MARIKO TAI, Nikkei staff writer
BEIJING -- Economic data revealed on Tuesday showed the Chinese economy enjoying upward momentum. However, concerns remain, especially with U.S. President-elect Donald Trump casting uncertainty over China's economy.
In November, retail sales of consumer goods increased by 10.8% from a year ago to reach 3.09 trillion yuan ($448 billion) according to data released by the National Bureau of Statistics. Sales of cars, travel-related products and online goods were the major drivers, Mao Shengyong, a spokesman for the bureau, told reporters.
Online retail sales continued to be the bright spot, up 26.2% from a year ago, reaching 4.59 trillion yuan from January to November. In that same period, online sales accounted for 12.5% of total retail sales of consumer goods, up 1.9% from last year.
The November increase was supported by the country's Singles Day online shopping bonanza on the 11th. This year, more Chinese consumers not only splurged on expensive electronics and luxury goods, but also stocked up on daily necessities such as toilet paper and shampoo. Alibaba Group Holding, a major e-commerce company, sold a record $17.8 billion worth of goods and services that day.
Other economic data also showed generally positive signs. Fixed asset investment increased 8.3% between January and November, amid the growth rate remaining flat compared to the first 10 months. Government policy continued to drive growth, as investment by state-owned companies jumped by 20.2% during the same period from a year ago. Private investment increased by a modest 3.1%.
"Today's data suggests that China's recovery remains intact heading into 2017," said Julian Evans-Pritchard, an economist at Capital Economics. But the outlook is a different story. "With credit growth now cooling and the property sector facing a correction, we expect growth to begin slowing again next year," he added.
"November's positive trends mean the Chinese economy is eating up its future demand," said Toru Nishihama, chief economist at Dai-ichi Life Research Institute. Auto sales are being boosted by tax breaks that are set to end this year for small cars, while online sales were propped up by Singles Day. "With demand expected drop sharply ahead, the data wasn't convincing enough to conclude that China's economy will continue to enjoy the same momentum," Nishihama said.
Economists' concerns have been growing since Donald Trump won the U.S. presidential election. "The Trump administration will take a tough stance initially by imposing punitive tariffs on select Chinese products," Standard Chartered said in a report led by economist Shuang Ding. The bank notes that Chinese exporters are likely to suffer and support will be needed because of Trump's policies.