China retail spending growth to remain tepid through 2025

This is due to ongoing soft macroeconomic conditions.

Subdued spending in China is expected to continue into the second half of 2024 and into 2025, S&P Global Ratings said.

The report said  this trend is attributed to persistent soft macroeconomic conditions, including a weak property market and a lackluster economic outlook, which are undermining consumer confidence.

According to Sandy Lim, a credit analyst at S&P Global Ratings, "Compared with 2023, when there were pockets of appetite for small-ticket luxury spending, we do not see any areas of strength this year. Trading-down dynamics have accelerated in 2024, and we anticipate this trend will persist into 2025."

Key risks include a potential slowdown in catering demand, which may arise in the latter half of 2024 after strong spending in the past 18 months. 

The auto retail sector may experience a slowdown in the decline of average selling prices in the fourth quarter of 2024, though continued price drops could occur if competition remains fierce. The appliances sector might face a more pronounced reduction in demand in 2025 after an increase in 2024. 

Weaker demand for apparel could result from milder seasonal temperature changes, especially during winter. 

Additionally, unfavorable demographic trends and low birth rates may impact food and beverage demand more rapidly than previously anticipated.