{"id":17959,"date":"2023-06-04T06:51:24","date_gmt":"2023-06-04T10:51:24","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/chinas-recovery-is-sputtering-consumers-are-keeping-the-economy-afloat\/"},"modified":"2023-06-04T06:51:25","modified_gmt":"2023-06-04T10:51:25","slug":"chinas-recovery-is-sputtering-consumers-are-keeping-the-economy-afloat","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=17959","title":{"rendered":"China\u2019s Recovery Is \u2018Sputtering.\u2019 Consumers Are Keeping the Economy Afloat."},"content":{"rendered":"
\n
<\/p>\n
<\/p>\n<\/figure><\/div>\n

Concerns that China\u2019s postpandemic recovery may be stalling haven\u2019t spread to Chinese consumers yet. <\/p>\n

First-quarter earnings results from consumer-facing companies operating in China suggest that the uptick in spending that companies have long been waiting for has finally arrived, as Chinese shoppers settle into a new normal.<\/p>\n

\n

Chinese retail sales have been making a gradual comeback, growing steadily over the past five months. April\u2019s retail sales jumped 18.4% year-over-year, up from November\u2019s 5.9% decline, according to the National Bureau of Statistics of China. Consumer confidence has also ticked up from its lows in the fall. Gross domestic product (GDP) for the first quarter of 2023 rose 4.5%, above economists\u2019 expectations. <\/p>\n

Indeed, for some Western retailers, the quarter marked a stark reacceleration in Chinese sales.
\n Lululemon Athletica
\n \u2018s (ticker: LULU) first-quarter earnings results, for instance, showed that Chinese revenue increase 79% during the period\u2014which helped the company barrel through Wall Street\u2019s expectations and set the stock up for its biggest percentage increase since 2019. <\/p>\n

\n Lululemon
\n isn\u2019t alone in recording better performance in China.
\n Ralph Lauren
\n (RL),
\n Tapestry
\n (TPR),
\n Under Armour
\n (UAA),
\n VF Corp.
\n (VFC),
\n Skechers
\n (SKX),
\n Canada Goose
\n (GOOS), and
\n Capri Holdings
\n (CPRI) all saw Chinese sales jump in the quarter. <\/p>\n

\u201cChina, with the reopening, we see a lot of strength there, and quite frankly, are doing a little bit better than we had even anticipated, which is a good sign,\u201d said Capri CEO John Idol in a call with investors. <\/p>\n

Restaurants were also reaping the benefits of more active consumers, with
\n Starbucks
\n (SBUX),
\n Yum China
\n (YUMC), and
\n McDonald\u2019s
\n (MCD) reporting positive same-store sales in their latest quarters. There could be even more upside if the government passes a stimulus package to prop up China\u2019s ailing property market.<\/p>\n

Still, that doesn\u2019t mean retailers are in the clear. <\/p>\n

\u201cChina\u2019s reopening is boosting spending outside the home, which will help domestic companies and global companies with exposure to this market,\u201d wrote a group of analysts at Moody\u2019s Investors Service. \u201cHowever, the rebound may not be as strong or lasting as some predict.\u201d<\/p>\n

Some Chinese consumer-facing companies are already feeling the pinch. While American retailers saw sales jump in the first quarter of the year, Chinese e-commerce companies saw more muted results.
\n Alibaba\u2019s
\n (BABA) revenue declined 2.6% in the latest quarter and
\n JD.com
\n (JD) sales fell 1.4%. These companies\u2019 shares have also struggled: JD stock is down nearly 40% this year, while
\n Alibaba<\/span>
\n stock is off 4%. E-commerce company
\n Pinduoduo,<\/span>
\n now known as PDD Holdings (PDD), is down 15%. <\/p>\n

The past few weeks have been a volatile one for Chinese stocks. Hong Kong\u2019s
\n Hang Seng Index
\n (HSI) briefly slipped into bear market territory in May, following a series of worse-than-expected economic indicators that reaffirmed fears that the current recovery could peter out. China\u2019s manufacturing purchasing managers index\u2014a key indicator for factory output\u2014contracted for the second straight month, and the country is also facing a new Covid-19 variant that threatens to derail the reopening. <\/p>\n

\u201cClearly, the tailwind of the post-pandemic\u00a0China\u00a0reopening is sputtering,\u201d wrote Navellier chief investment officer Louis Navellier in an email. <\/p>\n

Investors will get a fresh batch of economic data next week that will help markets determine how at-risk the recovery is. On Wednesday, China reports import and export figures for May. Trade has long been a crucial component of China\u2019s economic growth, which in turn has helped fueled global trade. Economists are expecting Chinese exports to have grown by 2% in May from a year earlier, according to data aggregator FactSet\u2014which would be a marked deceleration from April\u2019s 8.5% increase.<\/p>\n

With trade and manufacturing cooling down, China\u2019s consumers are keeping the tenuous recovery afloat. Here\u2019s to hoping they\u2019re strong swimmers. <\/p>\n

Write to Sabrina Escobar at sabrina.escobar@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Concerns that China\u2019s postpandemic recovery may be stalling haven\u2019t spread to Chinese consumers yet. First-quarter earnings results from consumer-facing companies operating in China suggest that the uptick in spending that companies have long been waiting for has finally arrived, as Chinese shoppers settle into a new normal. Chinese retail sales have been making a gradual […]<\/p>\n","protected":false},"author":1,"featured_media":17960,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-17959","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nChina\u2019s Recovery Is \u2018Sputtering.\u2019 Consumers Are Keeping the Economy Afloat. | iFintechWorld<\/title>\n<meta name=\"description\" content=\"Concerns that China\u2019s postpandemic recovery may be stalling haven\u2019t spread to Chinese consumers yet. 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