The latest data show that retail spending growth in the US and UK is slowing but remains a relative bright spot for both economies in contrast to China. There, retail spending growth is lagging behind other sectors.
This contrasting picture is at least in part due to the differences in the way policymakers have supported their economies. While advanced economies have sought to limit the hit to households’ incomes during lockdown, China has sought to boost output via government investment and more lending to businesses.
But another reason for the difference is that China’s manufacturers and exporters have benefited from resilient demand, buoyed by factors such as lockdown-triggered changes in the patterns of global spending, China’s early emergence from severe restrictions, and government assistance.
While these circumstances helped to ensure a fast initial rebound in Chinese activity, some factors are likely to prove temporary, suggesting that China may face a more challenging environment in 2021.