China's consumer market: A nuanced recovery (Part I)

How macro indicators are paving the way for consumer market recovery

Recently, the tariff war has cast a shadow over China's economic growth, heightening concerns about exports and increasing reliance on consumption growth. Coupled with hovering consumer confidence, high youth unemployment, and a split real estate market, the economic outlook has become rather blurred.

Against this backdrop, our presentation at Morgan Stanley's China BEST Conference Spring Series provided a unique lens into the consumer market recovery. By analyzing a wide array of our exclusive granular data, including real estate transactions, recruitment trends, and online/offline retail sales across multiple industries, we've dissected the market's "stage setting" and spotlighted standout brand performances. This data-driven approach enables investors to cut through the uncertainty and gain a clear view of the current state and potential of China's consumption recovery.

In Part I of our analysis, we focus on the macroeconomic factors shaping the recovery, specifically the labor market and real estate sector. These elements are vital for understanding the broader economic environment and consumer confidence.

Macroeconomic indicators: Setting the stage

Real estate: transaction volume on a healthy upward trajectory since the end of Covid

Post-COVID, China's real estate market has exhibited signs of stabilization, spurred by policy stimulus (see Amber's latest insights on the real estate industry). Transaction volumes are trending upwards, reflecting a slow revival of consumer confidence. While listed prices in lower-tier cities have declined moderately, high-tier cities are still seeing price adjustments. Notably, transaction prices have stabilized somewhat, with the bid-ask spread narrowing, indicating a potential equilibrium in the market.