SHANGHAI — China broke out of its COVID-19 induced slump on Tuesday when the National Bureau of Statistics said that countrywide retail sales turned positive for the first time this year. August eked out 0.5 percent year-over-year growth with retail sales totaling 3,357 billion renminbi, or $495 billion.
That compared to the negative 1.1 percent seen in July. The first eight months of the year taken together are down 8.6 percent from a year ago.
Notably, online spending in August grew by 15.8 percent. Spending on cosmetics and jewelry for the month rose 19 and 15.3 percent, respectively.
In contrast, retail in Hong Kong, which remains cut off from Mainland Chinese tourists, is still suffering significantly.
In July, the latest month for which data is available, Hong Kong retail sales fell 23.1 percent compared to a year ago — of which jewelry and timepieces was down 53.7 percent, footwear and accessories 53.6 percent, cosmetics 50.9 percent, apparel 42.5 percent and department stores 28.8 percent. The first seven months of the year taken together saw a 32.1 percent fall compared to the year prior.
August and beyond should see some recovery for the city.
“The third wave of COVID-19 in Hong Kong appears to have stabilized thanks to the reimposition of strict social distancing measures since mid-July,” said Nomura chief China economist Ting Lu, “with the daily average number of local new cases remaining around 10 over the past week. Social distancing measures in Hong Kong have been gradually relaxed.”
New World Development also reported Tuesday that its Hong Kong flagship property K11 Musea saw a 35 percent rebound from the first quarter, which it credited to its experiential retail and being able to offer large, wide open outdoor spaces. In August, it held a three-day shopping festival, in addition to launching an arts center. The mall plans to unveil more than 10 new restaurants and bars by October.
“Luxury goods, watches and jewelry marked an increase of 60 percent [quarter-on-quarter] in sales turnover, signifying local spending power is fueling an emerging trend of revenge consumption,” the company said, adding that the mall is expecting a 60 percent increase in turnover in the third quarter.
K11’s shopping malls in Mainland China in the second quarter saw an even stronger sequential growth of 85 percent.
A key test of China’s consumer recovery will be the National Day holiday in two weeks’ time. This year it coincides with the Mid-Autumn festival from Oct. 1 to 8. Businesses in China are bound to benefit from spending that otherwise would have gone overseas. Consulting firm Oliver Wyman earlier predicted that sales of luxury goods in China are expected to end this year up compared to 2019, thanks to the repatriation of spending. Chinese families with school-aged children are unable to travel during the holiday to school-enforced quarantine policies.