Rise of the Chinese Consumer Economy

November 17, 2015

Chinese Consumer Economy

Last week saw the return of investor fears surrounding Chinese growth. These concerns resulted in a commodities selloff, notably sending the copper price to its lowest point since 2009. The commodity price turmoil and emerging market growth concerns put downward pressure on producer and export companies around the world, broadly leading to stock markets ending the week lower.

There are concerns over the health of the Chinese economy, however, the country is in a transition from a producer and exporter based economy to a consumption led one. This transition has been developing rapidly since the new administration came to power two and a half years ago. Higher consumer activity is illustrated by a record-breaking “Singles day”, the Chinese equivalent of to Cyber Monday, where the country’s main e-commerce company Alibaba did over $1bn of sales within eight minutes of midnight on 11th November. While this is a one-off event, it shows that the emerging Chinese Middle Class is not afraid to spend in the current climate.

In the UK, we had further positive economic news, with the lowest rate of unemployment since 2008, at 5.3%. The number of people out of work fell 103,000 between July and September to 1.75m. This may start to be a concern for the Bank of England, as the UK approaches full employment there will start to be upward pressure on salaries that may begin to embed higher inflation.

Index Open Close Change % Change
FTSE 100 6353 6118 -235 -3.7%
S&P 500 2099 2023 -76 -3.6%
Dax 10988 10708 -280 -2.5%
Cac 40 4984 4807 -177 -3.6%
Nikkei 225 19265 19596 331 1.7%

 

Tuesday will see the inflation figures announced for both the UK and the US and on Thursday UK retail sales and US Jobless Claims will be released.