China Center Quarterly Consumption Roundup - Q1 2025
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China Center Quarterly Consumption Roundup - Q1 2025

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Trusted Insights for What’s Ahead

Growth in retail sales accelerated to 5.9 y-o-y in March, up from 4.0% in the “Jan-Feb joint period” (Jan-Feb).

Trusted Insights for What’s Ahead

Growth in retail sales accelerated to 5.9 y-o-y in March, up from 4.0% in the “Jan-Feb joint period” (Jan-Feb).

  • In Q1 2025, retail sales grew 4.6%, up from 3.5% in Q4 2024 and largely in line with the 4.7% growth rate posted for Q1 2024. In March, retail sales growth accelerated to 5.9% y-o-y, from 4.0% in Jan-Feb. The improvement was mainly driven by the consumer goods trade-in program, which boosted sales of white goods and communication appliances. 
  • Household income growth edged down in Q1 2025 compared to the previous quarter. Household expenditure growth was also slower than household income growth signaling continued weak consumer confidence.

While China's official headline unemployment rate remains stable at 5.2%, the Purchasing Managers’ Index (PMI) employment subindices paint a much gloomier picture. Labor market weakness will continue depressing household income and consumption.

  • The discrepancy is largely attributed to the National Bureau of Statistics' loose definition of employment which considers anyone working over an hour per week as being employed.

While consumer spending is poised to benefit somewhat from increased government support in 2025, the anticipated measures are unlikely to revive consumer confidence.

  • The Government Work Report released in March lists boosting consumption as a top priority. As part of these efforts, RMB 300 billion ($41 billion) from ultra-long special treasury bonds will be used to expand the ongoing trade-in program for cons

Author

Fiona Liu

Fiona Liu Fiona Liu

Economist
The Conference Board

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