Shanghai’s retail sales sink, revealing weak link in China’s consumption

Shanghai reported a significant decline in retail sales for June, showing consumption remains shaky in some parts of China

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Retail sales in Shanghai, China’s biggest city, dropped in June - a worrying sign for the state of consumption in the financial hub. Source: Bloomberg

Published: 7:00pm, 26 Jul 2024

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.”