than a year it has been in operation, with the Ministry of Commerce (cited by the media outlet China Daily) saying trade-in-related sales amounted to US$355 billion this year alone. Although it can be criticised for shifting the timing of some purchases rather than creating new ones, the scheme does result in more energy-efficient appliances entering households, so, from an environmental standpoint and from the perspective of consumers’ ongoing energy use and bills, it may have some benefit. Still, as the effects of the scheme fade and the broader economic backdrop gets darker, retail sales growth has declined secularly since the 6.4 per cent year-on-year increase in May. By November, sales rose by a meagre 1.3 per cent year-on-year, and for the whole January-November period, sales were up by 4.5 per cent, or 4.9 per cent when automobiles are excluded. The coffee wars are set to ramp up Income growth from catering has also been declining from its most recent peak of 5.9 per cent in May, and the average growth rate in the six months since has been 2 per cent. In November, the category gained 3.2 per cent. This is a category in which huge retail chains have a big stake, none more so than major competitors in the cafe market, such as Starbucks and Luckin. Although results for the two companies are only available through the end of the third quarter, they provide a flavour for what is going on more broadly across the catering industry. At the premium end of the cafe market, Starbucks reported comparable-store sales growth of 2 per cent in Greater China in the third quarter, which came after a 14 per cent decline in the third quarter last year, producing a weak ‘two-year stack’ of -12 per cent. After a lengthy beauty contest in which competing offers for the company’s China business were evaluated, Starbucks recently sold a controlling interest to a local investment firm, Boyu Capital, which it believes has the local knowledge to increase Starbucks’ presence in the country to 20,000 stores and mount an effective challenge in smaller cities. Starbucks’ competitor Luckin has done slightly better over the same quarter, with same-store sales growth of 14.4 per cent in the third quarter, up from a double-digit decline last year, resulting in a two-year stack of just +1.3 per cent. While Starbucks has only about 8000 stores in China, Luckin has almost 30,000. Precious metals are still in favour Despite the slowing pace of headline growth, a few retail categories in China are still doing well. A prominent one is gold, silver and jewellery, whose sales rose by 8.5 per cent year-on-year in November and by almost 40 per cent for the year to date, partly thanks to a 50 per cent increase in gold prices during the year. The demand for gold bars, gold coins and gold jewellery has been supercharged as uncertainty about the future and outsized returns on precious metals make them popular investments as well as wearables. Meanwhile, sales of appliances and audiovisual equipment fell by almost 20 per cent in November, compared to a year-to-date growth rate above 25 per cent, thanks to the trade-in scheme. Consumers want value…and delivery speed. The generally mediocre results shouldn’t come as a surprise. Walmart and other global retailers in China have long pushed the theme that Chinese consumers are tapped out and highly value-conscious. Indeed, Walmart itself has been exploiting the trend: the company reported global membership income growth of 16.7 per cent in the quarter ending October 31, citing Sam’s Club membership in China as a key driver. Sam’s Club and e-commerce enjoyed 32 per cent sales growth on a constant-currency basis in the October quarter, and overall year-on-year sales growth in China was north of 20 per cent, although that included contributions from the opening of eight new Sam’s Clubs over the preceding 12 months. Walmart CEO Doug McMillon said recently that four out of five e-commerce orders in China were now being delivered in less than one hour. However, he made no mention of the mayhem that could have been caused on China’s already chaotic urban roads. “China is more advanced in terms of digital retail than anywhere we operate,” he added. Government on the economy: same narrative China’s economy grew by 4.8 per cent in the third quarter, while per capita disposable income is rising slightly faster than per capita consumption, so consumers are saving more. The property market continues to be a cause for grief, with new house prices in freefall, so this is a heavy adverse wealth effect on households. The staggering level of debt isn’t helping: in September, the outstanding value of bank loans was US$38 trillion, three times that of the profligate US. The good news for retailers is that the government has prioritised domestic stimulus to offset the volatility and uncertainty stemming from its external sector, including trade relations. The appliance trade-in scheme was just the beginning, and the word is that it may be extended in 2026 and broadened to include other consumer items, possibly with an emphasis on products with embedded AI features. The government is also pushing financial institutions to enhance their services to consumers for big-ticket purchases. Details aren’t clear, but it would be logical to expect easier credit and a relaxation in lending standards, among other things. Support will also be directed toward the services sector, where new financial products can be expected. Further reading: Why Luxury brands are turning on the charm in China