Consumption is changing, not downgrading

Consumption downgrading has become a hot topic of discussion among Chinese netizens, but whether Chinese people are reducing their consumption or changing the nature of their consumption is not only hard to ascertain but also hard to prove.

Different sets of data lead to different conclusions. The most direct data seem to suggest consumption is shrinking. According to the National Bureau of Statistics, the growth of retail sales of consumer goods nationwide in July was 8.8 percent year-on-year while the actual growth was only 6.5 percent year-on-year, which are low compared with previous years.

But macroeconomic researchers argue that total retail sales of consumer goods are calculated based on the sales of only physical commodities and do not take into account other types of consumption such as service consumption, and thus do not reflect the whole picture of total consumption.