Despite the huge consumer spending recorded during the recent Lunar New Year, the economy of China is set to rather cool down this year, according to analysts. The increasing lending rates in China is expected to drag the domestic consumption further which could also result to a general slowdown in the growth of the economy.
In further details, the consumers spending of China had US$146 billion during the week-long holiday. This was generated from activities such as eating and movie-going. If to compare on a year-over-year basis, the data increased 10.2 percent, the Ministry of Commerce of China told reports.
Yuyuan Garden - a traditional shopping area in Shanghai, China.
Also, the box-office receipts during the holiday period climbed by at least 52 per cent to 5.7 billion yuan or US$900.17 million. This was led by local films such as Monster Hunt 2 and Detective Chinatown 2, as stated by Chinese ticketing website Maoyan.com.
Despite the rise in the above mentioned sector, there was an underlying pressure felt within the economic growth of China. Chief Economist Jiang Chao also noted that the lending rates which is currently experiencing a rise could push down the entire domestic consumption for 2018.
However behind the numbers are concerns of mounting downward pressures on the economy, says Jiang Chao, chief economist at Haitong Securities.
“Although consumer demand has been fully released during the Spring Festival holiday, the performance of the past week could only be described as barely satisfactory,” Jiang expressed in a statement.
Retail Sales for Restaurant and Shopping Malls during the holiday grew 11.4 per cent in 2017 which exceeded this year’s 10.2 per cent record, the Ministry of Commerce reported.
“The setbacks of a leveraged economy has started to surface, which will then pose downturn pressure on the economy,” Jiang added.
Furthermore, more analysts have likewise forecasted a much slower growth this year for China.
According to the Swiss bank, a cooling property market with a slower infrastructure investment and ongoing deleveraging efforts could factor to the potential decline of the economy.
“We expect consumption to stay resilient, exports to keep a single-digit growth on continued global recovery, and investment to continue decelerating on slowing property and infrastructure investment,” UBS economists Thomas Deng and Yifan Hu told reports.
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