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Chinese Consumers Seem Poised to Spend More on Retail This Year

Last year, China experienced a decline in GDP growth, along with a steep drop in consumer sentiment exacerbated by an anti-corruption campaign that dampened the intention to spend in lower-tier cities in particular. This year, although business activity was slow in the first quarter, the economy has shown signs of stabilizing, with improved consumption growth. After dropping to a five-year low in January and February, total retail-sales growth increased in May to 12.5 percent, its fastest pace since December of 2013.

Chinese consumers, it seems, have accepted the new economic reality and adjusted accordingly. A survey of 1,000 consumers in 12 cities, conducted in April by BCG’s China Center for Consumer and Customer Insight, shows that the number of people who believe the economy will improve remains the same as last year. But general consumer sentiment and levels of security are on the upswing.

As a result, the intention to spend has recovered significantly as well. This year, 31 percent of consumers plan to increase their discretionary spending over the next 12 months. That’s only 4 percentage points more than last year and quite a bit less than the high of 38 percent in 2012, but this year’s results mean that the number of consumers who intend to spend more once again exceeds the number who intend to spend less.

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