China’s retail sales experienced a 7.9% increase in 2019, but that was relatively slow growth by China’s recent standards. The US-China trade war and China’s organically slowing economy led to across-the-board downshifts in most categories. The country is amid the final stages of an economic maturation that precludes the ultrahigh growth rates of years past, regardless of politics and policies. However, its potential growth rates for consumption and retail sales are still higher than what the US and other major markets will see in pandemic-ravaged 2020. That leaves China in a position to reclaim some degree of standout performance once the pandemic subsides.
International factors, though, could offset China's recovery. “China has an economy that is deeply reliant on trade, globalization, cross-border investment and the performance of other major economies around the world,” said Ethan Cramer-Flood, eMarketer forecasting writer at Insider Intelligence and author of our new report, “China Ecommerce 2020.”
“Regardless of how well the country’s system deals with the virus, good economic news may well be a long way off if the rest of the world slips into long-term recession,” he said.
Although China’s economic growth is not export-driven as it once was, its labor market is still reliant on manufacturing and trade, which means wages (and therefore consumption) are vulnerable to a loss of demand from the rest of the world. If North America, Europe and Japan do not recover quickly, it may not be possible for China to pull out of recession either.
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