Analysis: What’s Behind China’s Spending Slump

Dwindling confidence among consumers, businesses, local governments and other organizations is weighing on a focal point of the country's efforts to revive its slowing economic growth

Consumption, a focal point of China’s efforts to boost slowing economic growth, weakened in the second quarter of this year due to lagging spending in the country’s larger cities and among companies, governments and other organizations.

At its July meeting, China’s Politburo emphasized that boosting consumption was crucial to increasing domestic demand.

An analysis of data on 28 first- and second-tier cities helps reveal where consumption has been weak.

In China’s four first-tier cities, year-on-year changes in retail sales — a key indicator of consumption — came in well below the nationwide 3.7% growth in the first half of 2024.

In the 24 second-tier cities, only seven beat or matched the nationwide growth rate.