As business investment growth slows, the consumer has been touted as the saviour of the global economy. China, in particular, is more interested in a consumer-led economic recovery than most as the country tries to move away from cyclical, capital intensive industries and rebalance towards a service economy.

Other Asian nations are also following the same playbook as they look to rebalance their economies to more sustainable models that can grow through all stages of the economic cycle.

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China: Falling retail sales are a major concern

China is having some success in this rebalancing. As Bloomberg reports, consumption contributed 73.4% to China’s economic growth in the first half of 2016, up from about 60% a year earlier. Further, retail sales the period increased by 10.6% compared to the median estimate of 9.9%.

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However, first-quarter figures also showed that while consumption is becoming a more important part of the economy, China is still heavily reliant on industrial output and credit growth to stimulate economic demand. Industrial production climbed 6.2% in June from a year earlier, and aggregate financing totalled 1.6 trillion yuan for the month of June, compared with an estimate of 1.1 trillion yuan in a Bloomberg survey. For June, China’s M1, which includes bank deposits and currency in circulation, rose 24.6% year-on-year the biggest increase in six years while M1, which includes savings deposits increased 11.8%. M2 is now almost twice the size of China’s gross domestic product.

China: The devil is in the detail 

There’s always some degree of scepticism that accompanies China’s economic data and is it no different when it comes to retail figures. In fact, while China’s official figures show that the country’s retail sector and consumption are growing, a recent equity research note from Asia equity analysts at Macquarie presents an entirely different picture.

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The report highlights that over the past few weeks some key Asia-based footwear and apparel suppliers, have reported some extremely disappointing results. These companies supply mainly US brands that source predominantly out of Asia. The results imply that US brands are scaling back orders as they attempt to right-size inventories. And while this trend could be more indicative of the slowdown in global consumer demand, US footwear and apparel brands have been trying hard to break into the China and Asian marketplaces for the past few years, so declining sales could also reflect a weak retail environment in these regions.

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Further, Macquarie notes that jewellery results out of Asia have been disappointing so far this year. Two key jewellery retailers, Chow Sang Sang and Chow Tai Fook, have reported bad results so far this year. Chow Sang Sang announced a profit warning on July 15, while Chow Tai Fook reported disappointing 1Q17 results with same-store sales down 17% year-on-year in mainland China and 20% year-on-year for Hong Kong. Another retailer, Luk Fook reported same-store sales declines of 24% for the first quarter of 2017.