MNI REALITY CHECK: China Retail Sales Decline To Slow In March

By Wanxia Lin

     BEIJING (MNI) - China's retail sales growth looks set to improve from the

historic decline seen in the first two months of the year, although any rebound

could be limited until there is a wider reopening of restaurants and car sales

reignite, according to MNI's latest Reality Check.

     Although better than the previous period, overall sales may remain in

negative territory in March, as measures to slow the spread of the coronavirus

were partially rolled off through the month.

     Spending on big ticket items like cars saw only a limited recovery and many

catering companies resumed operations much slower than industrials, Guo Yuwei, a

senior analyst at CIB Research told MNI. "Online sales may have recovered

quickly in March with improved logistics, underpinning the headline retail

sales," Guo added.

     By end-March, about 80% of restaurants nationwide had reopened, although

sales figures were about a third of the level a year ago, with most revenue

coming from delivery services, said Yang Qingsong, secretary-general of the

China Commerce Association for General Merchandise, advisors to the Ministry of

Commerce on virus issues.

     --EATING OUT

     Yang noted that reopened restaurants still have restrictions on numbers,

with social distancing still in operation.

     Catering led the decline in retail sales in January and February with a

43.1% y/y plunge, followed by a 41.1% slump in jewelry sales and a 37% drop in

car sales, data released by the National Bureau of Statistics showed.

     A strong recovery in the restaurant sector is heavily dependent on the end

of the pandemic, as consumers are still reluctant to return to eating out.

However, Yang sees it as a promising sector for an eventual pick-up, as reduced

household income may constrain people's appetite for tourism.

     Department stores nationwide were almost fully reopened by the end of

March, though taking only half of the revenue of the same period last year, said

Yang, adding that the Q1 revenues could be just a quarter of Q1 2019.

     --FOOD SALES

     Nearly all supermarkets resumed operating by end-March, and their Q1

incomes may exceed the corresponding period last year, as many remained open in

the first two months to ensure basic living needs, said Yang. The resumption

rate of convenience stores reached 95%, and Q1 sales may fall slightly below Q1

2019 level, he added.

     Car sales, about 10% of headline retail sales, improved steadily in March,

but demand is unlikely to really take off in the short term. Sales dropped 61%

y/y in the last week of February, and the figure gradually improved to -50%,

-44%, -40% and -24% y/y in the following four weeks, according to China

Passenger Cars Association (CPCA).

     The sales of passenger cars in March rose 317.8% on a monthly basis, though

it dropped 40.4% on year, the CPCA added.

     Although the government plans to boost car sales, the implementation of

stimulus measures by local authorities may kick in as early as April, the CPCA

said, noting the effects would not be obvious at the beginning.

     The NBS is set to publish the March retail sales data on 1000 local time on

April 17, with analysts expecting the y/y rate to recover to -10.0% y/y from

-20.5% in the first two months.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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