China consumer spending to rise in 2025, but only modestly, Bain and Kantar say

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Report predicts a single-digit percentage rise in the value of consumer spending next year, as volume rises while price pressures continue

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Tourists walk past a shopping mall in Kunming City, southwest China’s Yunnan Province, on December 6, 2024. Photo: Xinhua

Daniel Renin Shanghai

Published: 9:35pm, 10 Dec 2024

China’s consumer market, stuck in a deflationary spiral, is poised to stage a recovery next year, buoyed by Beijing’s proactive fiscal policies and distribution of retail vouchers by local governments, according to a joint study by global consultancy Bain & Company and market research firm Kantar Worldpanel.

However, the turnaround will be modest as it will take time for economic fundamentals to improve and consumer confidence to return, they said.

“The Chinese government has launched more stimulus measures and issued guidance to support household consumption since late September,” Bruno Lannes, a partner with Bain, said in a media briefing on Tuesday. “Although it will take patience and time for the stimulus to fully take effect, it is likely to progressively build consumer confidence which will later translate into higher consumption.”

The forecast was made one day after a readout of a Politburo meeting chaired by Chinese President Xi Jinping said the country would embark on a proactive monetary policy to spur domestic demand. It is the first time since 2011 that Beijing has shifted its monetary policy stance from “prudent” to “moderately loose”.

Total spending in the fast-moving consumer goods (FMCG) sector in mainland China dropped 1.1 per cent year on year during the third quarter of 2024, the joint report by the two consultancies showed, without revealing absolute numbers. The mild growth followed a 1.6 per cent year-on-year rise in the previous quarter. In the first three months of 2024, the number climbed 2 per cent year on year.

Over the first nine months of 2024, FMCG sales increased 0.8 per cent from the same period in 2023, a result of a 4.6 per cent increase in volume along with a 3.6 per cent decrease in average selling prices, the report said.