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Home > News > China's shoppers are still going strong

China's shoppers are still going strong


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With China's economy slowing, many market and economic experts believe that the United States has more leverage to negotiate favorable terms to end the trade war.

They may be wrong about that.

Chinese consumers continue to spend, despite concerns about tariffs imposed on the country by the Trump Administration. Chinese companies are reporting robust earnings. Alibaba (BABA)and its top online retail rival JD.com (JD) both had record sales on Singles Day, a Chinese shopping holiday for young people. Luckin Coffee (LK), a rapidly growing rival to Starbucks(SBUX) in China, recently reported strong earnings as well.

Other Chinese e-commerce firms, such as online travel leader Trip.com (TCOM) (formerly known as Ctrip) and Pinduoduo (PDD), which offers discounts to people who buy goods online as a group, are thriving.

Trade war worries don't seem to bother investors, either. Alibaba's stock is up 35% so far in 2019 — more than twice the 16% gain for Amazon (AMZN) shares. JD stock has soared nearly 60% while Pinduodudo's is up 85%.

"The Chinese consumer is holding up. The numbers are staggering," said Aaron Clark, a portfolio manager at GW&K Investment Management.

The fact that Chinese consumers keep spending seems to be an expression of confidence in the overall health of that nation's economy. More tariffs and any escalation of the trade war would surely put more pressure on China's manufacturing sector, but that hasn't kept its growing middle class from buying ever more gadgets and other consumer products.