Chinese Economic Growth Moderates as Consumption Slows
June 17, 2021
China’s economic growth moderated last month as year-over-year comparisons to the early days of the pandemic became less flattering and a fresh wave of coronavirus infections kept consumers out of stores.
Industrial production, a key element of China’s economic recovery, was up 8.8% from a year prior, down from April’s 9.8% increase. Despite the slight slowdown in growth, factory output continues to be buoyed by strong demand overseas for goods produced in China. One metric that tracks factory output was 13.6% higher than in May 2019, before the pandemic began.
While demand from overseas consumers continues to be strong, domestic demand faltered, stymying Chinese officials who seek to make domestic consumption the main driver of the nation’s economy. Retail sales were up 12.4% last month compared to a year prior, down from the 17.7% year-over-year growth seen in April. Economists polled by the Wall Street Journal had expected a 13.6% increase.
The Wall Street Journal cites an economist who attributes the disappointing sales figure to sluggish wage growth, a slow vaccine rollout, and long-term behavior changes brought about by the pandemic, whereby wary consumers opt to continue saving rather than spending.