China: Retail sales revisited

Research evidence excerpt

China: Retail sales revisited

Global Markets Research

2 July 2026Asia Insights

Economics - Asia ex-Japan

Research Analysts

China: Retail sales revisited Asia Economics

Hannah Liu - NIHKIn this report, we revisit the sharpslowdowninretailsalesgrowth this year. We find the

hannah.liu@nomura.comslowdown was mainly driven by subsidized goods, which were affected by payback effects

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from thetrade-inprogram. The first-ever release of aggregate retail sales growth covering

Jing Wang - NIHKgoods and all services (including catering) suggests overall services consumption growth

jing.wang@nomura.comhas remained relatively stable. Beijing's multi-year trade-in subsidy program has

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exhausted its capacity to stimulate goods consumption, while services consumption

proves more difficult to boost through subsidies due to its non-standardized nature and Ting Lu - NIHK

ting.lu@nomura.cominherent price volatility. With limited policy room remaining, we are lowering our quarterly

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retail sales growth forecasts for Q2-Q4 to 0.2% y-o-y, 2.4% and 3.5%, respectively, from

2.8%, 3.5% and 3.7%. Our full-year forecast is thus lowered to 2.2% from 3.2%.

A recent research report from CF40 suggests balance sheet repair is already underway,

but we believe this is partly driven by households cutting spending and paying down debt,

which further dampens consumption. Moreover, amid the current AI boom, the repair

appears concentrated in the wealthiest cohorts, who have the lowest marginal propensity

to consume (see China:AIboom,propertybustandK-shapes, 27 May 2026). We

maintain our view that the cleanup of bad debt in the propertysector and a

comprehensive reform to the basicpensionsystem remain the most effective policy