Despite China's economic slowdown, consumption is resilient
IF YOU believe that China's economy is in trouble and that Chinese consumers are clinging tightly to their yuan, a visit to a local car dealership may make you think again. China has roared past America already to become the world's biggest car market. In March sales of passenger cars zoomed again, by nearly 10% year on year. Shiny sport-utility vehicles (SUVs), the hottest, shiniest items at this week's biennial Beijing Auto Show (pictured), did even better: sales jumped by 46% in March from a year earlier. The car market is forecast to keep growing briskly for the rest of this decade (see chart).
The Chinese consumer is flashing his wallet elsewhere, too. China's box-office revenues shot up by nearly 50% on a year earlier in 2015, to $6.8 billion. Cinema operators led by Wanda Group, an ambitious local conglomerate that recently bought Hollywood's Legendary Entertainment, have poured money into expansion; the number of screens across China has been rising at 36% a year since 2011.
After years of expansion, the smartphone market is peaking. Some firms still thrive: China's Huawei, a telecoms giant, predicts that revenues from its consumer-devices division will rise by about 50% this year. But Xiaomi, an innovative electronics firm once seen as China's answer to Apple, is losing steam. Apple itself announced weaker results on April 26th (see article). Revenues from sales in greater China fell by 26% year on year. As the market for devices matures, however, consumer spending is shifting to services: data usage has grown at triple-digit rates since 2012.
The unrelenting march of e-commerce continues. In 2010 online shopping accounted for only 3% of total private consumption, but it now makes up 15%. Alibaba, which processes more sales on its e-commerce platforms than eBay and Amazon combined, saw annual Chinese revenues grow to 63 billion yuan ($9.7 billion) in 2015, a rise of nearly 40% compared with a year earlier.