China retail sales fall for first time since Covid reopening

China’s retail sales have fallen for the first time since the country dismantled its strict pandemic lockdowns, underscoring ongoing weakness in domestic demand.

According to the National Bureau of Statistics, retail sales fell 0.6% year-on-year in May, reversing a 0.2% increase in April and marking the first annual decline since the end of 2022.

The decline adds to concerns over China’s uneven consumer recovery, with exports continuing to perform strongly while household spending remains under pressure.

For the first five months of the year, total retail sales of consumer goods still rose 1.4% year-on-year to 20,603.1 billion yuan. Excluding automotive sales, retail sales were up 2.7% over the same period.

The May result showed a sharper split between urban and rural consumption. Urban retail sales fell 0.9% year-on-year, while rural sales rose 1.5%.

By category, goods sales fell 0.7% in May, while catering revenue grew just 0.6%, suggesting both product spending and eating-out demand have softened.

The pressure was also visible across traditional retail formats. From January to May, sales at specialty stores fell 1.2%, department stores dropped 1.8% and brand-exclusive stores declined 7.6%.

Necessity-led formats performed better, with convenience stores up 6.8% and supermarkets rising 3.6% over the same period.

Online retail remained one of the stronger parts of the market. Total online retail sales of goods and services rose 5.9% year-on-year in the first five months to 8,317.7 billion yuan, while online sales of physical goods increased 5%.

Food was the strongest online category, rising 15.5%, followed by clothing at 7.2% and daily necessities at 1.6%.

The figures point to a Chinese consumer market that is still growing in pockets, but increasingly split between digital, necessity-driven spending and weaker discretionary retail.

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