Ditch the stats: China retailers don't buy signs of recovery
By Anne Marie Roantree and Donny Kwok
HONG KONG (Reuters) - If things are really starting to look up for China's economy, as a recent spate of better-than-expected government data seems to suggest, nobody appears to have told its biggest retailers.
A Reuters review of first-half earnings showed that more than 20 Chinese companies selling everything from footwear to food were not convinced the economic slowdown had bottomed out, and neither were their traditionally thrifty customers.
"The reality behind the numbers is gloomier," said leading footwear retailer Belle International Holdings Ltd (1880.HK: Quote) as a raft of data, supported by government statements, indicated the world's second largest economy may be stabilizing after two years of slumping growth.
"There are uncertainties in future prospects as the economy is struggling with a difficult transition involving structural rebalancing and revamping the growth model," said Belle, which has a market value of $11.6 billion and manages more than 18,000 retail outlets across 360 Chinese cities.
"As a defensive reaction, consumers are becoming more inclined to save and less willing to spend," it added.
Economists have long doubted the accuracy of official economic data and this skepticism has increased as China plots a course towards consumption-led growth. The official retail sales measure, for example, counts a sale from when an item is shipped, rather than when it is actually sold.
The latest data, however, supports retailers' complaints.
Retail sales grew 13.2 percent in July year-on-year, a slowdown from 14.3 percent annual growth in 2012, and 17.1 percent growth in 2011. Continued...