China shoppers ended 2016 on spending spree but headwinds seen brewing


Chinese consumers flocked to malls, restaurants and cinemas ahead of the year’s biggest holiday season, highlighting the consumption power transforming the economy.

Foot traffic at shopping centers and eateries edged up while online sales climbed from a year earlier, according to data from Baidu Inc., operator of the nation’s dominant search engine, and No. 2 e-commerce platform Inc. Consumer confidence and box office receipts also rose, while car sales held up.

While Christmas isn’t observed, that hasn’t stopped businesses from introducing shopping holidays around the end of the calendar year, and the trend is increasingly attracting middle-class shoppers. The week-long Lunar New Year holiday starting at the end of this month is the major one for buying gifts and — for hundreds of millions of people — heading home to see the family.

China’s shoppers are helping the economy transition away from overreliance on investment-led growth, though the latter remains a key pillar. Still, headwinds are blowing as both box office and car sales are expected to slow down.

These five charts give a read on how consumers are faring:

Foot traffic at restaurants and malls increased in December from a month earlier, Baidu data show. Yearend auto sales appeared brisk, while tourism slumped during a period without public holidays. Online outlets are taking businesses from brick-and-mortar shops, where activity edged down from a year earlier. The gauges are based on location data of mobile users.

Online consumption pulled back from a November record spurred by the Singles Day national shopping bonanza, yet still saw robust growth from a year earlier across categories from alcohol to cosmetics, according to JD Finance, a unit of e-commerce platform Online sales surged 30 percent in December, with diamonds the most dazzling product throughout the year, according to a report by Shanghai-based CEBM Group based on JD data.

The Westpac MNI China Consumer Sentiment Indicator rebounded to 116.6 in December from 114.9 in November as shoppers had a brighter outlook for their personal financial situation.

“With private sector investment still subdued and question marks around the export environment, the Chinese consumer is likely to again be a key swing factor for the wider economy,” Matthew Hassan, a Sydney-based senior economist at Westpac Banking Corp., wrote in a statement.

Box office activity jumped during a key movie season, according to entertainment research firm EntGroup Inc. in Beijing. “The Great Wall,” a historical adventure starring Matt Damon and directed by Zhang Yimou, racked up 979.4 million yuan last month despite poor reviews. Japanese animated film “Kimi no na wa,” or “Your Name,” enjoyed acclaim and strong sales.

Expansion of the movie industry, an emerging battleground for global entertainment companies aiming to attract Chinese consumers, fell short of sustaining the prior year’s epic gains. Total box office rose 3.7 percent from a year earlier in 2016 to 45.7 billion yuan ($6.6 billion), government data show. That compared with a 49 percent surge in 2015.

The auto sector was a bright spot for the economy in 2016, with vehicles sales rising 13.7 percent. December sales held up, while the expansion will probably slow this year.

The MNI China Car Purchase Sentiment Indicator rose to 89.8 in December from 88.3 in the prior month as consumers expected lower fuel costs. “The planned car budget of Chinese families continued to trend toward the middle ranges in November with the more expensive bands falling out of favor,” MNI analysts wrote in a report.

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