China’s economy may be slowing down, but the country is still set to eclipse the United States as the world’s top retail market for the first time. Retail sales in China will reach more than $5.6 trillion this year, about $100 billion more than in the United States, according to a report published Wednesday by research firm eMarketer.
The Chinese population’s growing wealth and the rapid development of e-commerce have driven the country’s epic retail boom.”In recent years, consumers in China have experienced rising incomes, catapulting millions into the new middle class,” said Monica Peart, senior forecasting director at eMarketer. “The result has been a marked rise in purchasing power and average spending per person.”
The firm’s prediction highlights China’s increasing importance as a market for global brands even as growth overall cools. The country is already the world’s largest market for cars and smartphones.
Ecommerce is a major driver of China’s retail economy, with sales growing more than 30% in 2019 to reach $1.989 trillion. That means 35.3% of China’s retail sales occur online—by far the highest rate in the world. By the end of this year, China will have 55.8% of all online retail sales globally.
The US lags far behind, with ecommerce on track to represent 10.9% of its retail sales. (China surpassed the US in ecommerce sales in 2013.)
Alibaba leads ecommerce sales in China with a 53.3% share. But its share has been steadily declining for the past several years, as smaller players—including social commerce platform Pinduoduo—have been chipping away at Alibaba’s dominance.