China Retail Sales Outlook: A City-Level Guide
By Suyang Zhou - Research Analyst
China’s consumer economy is gaining traction. As a principal driver, final consumption accounted for 63.4% of Chinese economy in 2Q 2017. As local economic reports are gradually being released, we are going to pierce into different cities to decipher their consumption pattern and momentum.
Let’s first look at a ranking chart of retail sales as of 2016. The threshold defined here is RMB300 bn. Clearly, all these cities are T1 and hot T2 cities, 6 of which are from Yangtze River Delta region. The top 10 cities include Beijing, Shanghai, Guangzhou, Chongqing, Chengdu, Tianjin, Wuhan, Shenzhen, Hangzhou and Nanjing. As per retail sales data in 1H 2017, Shanghai, Wuhan, Nanjing, Fuzhou, Xi’an and Zhengzhou all surpassed their frontrunners and exhibited great potential in consumption.
After taking into account per capita figures of retail sales and disposable income, we sketched the scatter diagram below. Dotted cities lied above the trend line have more propensity to consume under similar income levels. These cities include Hefei and Xiamen (disposable income per capita ranges from 30000 to 40000 CNY); Shenzhen, Wuxi, Ningbo, Suzhou and Shanghai (disposable income per capita ranges from 45000 to 50000 CNY); Beijing and Hangzhou (disposable income per capita ranges from 50000 to 60000 CNY). On the other hand, cities below the line have room to consume more, such as Kunming, Chengdu, Tianjin, Zhengzhou, Harbin, Xi’an, Shenyang, Fuzhou, Jinan, Wuhan, Changsha and Nanjing, most of which are provincial capital cities and regional centers of human and logistics resources.
Focusing on population trends, Dalian and Harbin saw the biggest population outflow in the past five years. The top 10 cities with the greatest population inflow are Tianjin, Chengdu, Beijing, Shenzhen, Chongqing, Guangzhou, Zhengzhou, Wuhan, Shanghai and Changsha.
In summary, below is the overall ranking for consumption strength and potential. Obviously, Beijing, Shanghai, Guangzhou and Shenzhen (Big Four T1 cities) rank top in terms of both strength and potential. The list for T2 cities includes Chongqing, Tianjin, Chengdu, Wuhan, Nanjing, Suzhou and Ningbo. The aforementioned 11 cities will play a principal role in China’s future consumer economy.
Please access our full report here, where we analyze nine perspectives, including retail sales, disposable income per capita, net population change, business environment and business cost etc., to obtain a ‘3D overview’ of the consumer economy at city level.