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AsianFin -- As consumer spending rebounds across China, Beijing's retail sector continues to struggle. Official data released by the Beijing Municipal Bureau of Statistics shows that retail sales in the national capital fell 9.9% year-on-year in March, well below the national average increase of 4.6%.
The sharp drop has raised concerns over weakening consumer confidence and the limited effectiveness of recent stimulus measures in major urban centers.
Restaurant revenues declined 3.1% in March, while goods retail slumped 10.6%. The downturn dragged down Beijing's first-quarter total retail sales, which shrank 3.3% year-on-year, highlighting a widening gap between the capital and broader national consumption trends.
Analysts say the weak performance was largely driven by declines in big-ticket purchases. Sales of communication devices plummeted 38.2%, autos dropped 20.2%, and home appliances fell 6.7%, despite government campaigns promoting equipment upgrades and trade-ins for new consumer goods.
"The underperformance in Beijing was heavily influenced by big-ticket items like vehicles and electronics," said Yao Jielu, a researcher at the East Asian Institute at the National University of Singapore. "It's also a reflection of lingering caution among consumers, who are prioritizing financial safety over discretionary spending."
Indeed, the only categories to register year-on-year growth were food staples (up 1%) and gold and jewelry, which surged 28.5%, suggesting a shift toward safer, value-preserving assets.
Shen Meng, Executive Director at Chanson Capital, attributed part of the March slowdown to Beijing's service-heavy economy, where post-holiday dips in sectors like dining and tourism are more pronounced. He also noted that earlier consumption subsidy policies may have exhausted their effectiveness in first-tier cities like Beijing, as much of the demand had already been front-loaded.
Despite nationwide efforts to boost domestic demand, including the rollout of nearly 30 local measures in March—from restaurant vouchers to automotive replacement subsidies—Beijing's consumer sentiment remains tepid. According to a first-quarter survey, the city's Consumer Confidence Index stood at 99.1, still in the "weak confidence" zone despite a modest uptick from the previous quarter. The employment satisfaction sub-index fell 4.3 points to 80.8.
"Even with supportive policies in place, the momentum just isn't there," said Shen. "Expectations around income and employment are softening, and falling home prices are adding to psychological pressure."
Yao also pointed out that households in Tier-1 cities face higher debt levels compared to those in lower-tier cities, further dampening their ability—and willingness—to spend.
As the Chinese government prioritizes consumption in its 2025 economic agenda, all eyes will be on whether targeted policies can help turn the tide in Beijing and restore consumer confidence in one of the country's most important economic engines.
