Key Takeaways:
China's midyear 618 shopping festival generated just 0.9% growth in e-commerce gross merchandise value, the weakest pace on record, as households tightened spending and regulators cracked down on promotional tactics that had previously fueled double-digit gains.
Total online sales across all channels reached 934 billion yuan ($138 billion) during the May 13 to June 18 event, data firm Syntun said Monday. But e-commerce platform GMV — which excludes instant-delivery and group-buy orders — came in at 863.6 billion yuan, a sharp deceleration from the 15.2% growth recorded during the 2025 festival. The slowdown was broad-based: Alibaba's Tmall led in market share, followed by JD.com and ByteDance's Douyin, though all three saw subdued performance.
"The deceleration in e-commerce industry growth was attributable to a higher base in trade-in categories such as home appliances and smartphones, weakening consumer confidence, and government efforts to promote fair competition among e-commerce platforms," HSBC Global Investment Research said in a note, citing Syntun data. The broker cut its US-listed target price for Alibaba to $176 from $180 and trimmed PDD's target to $144 from $145, while maintaining JD.com's target at $37. All three stocks carry Buy ratings.
The 618 slowdown follows a broader deterioration in Chinese household spending. Retail sales fell 0.6% in May from a year earlier, the first decline since the country emerged from pandemic restrictions in 2022, according to the National Bureau of Statistics. Home appliance and smartphone sales — categories that had benefited from state trade-in subsidies during the 2025 festival — dropped 8.5% YoY in May, versus a 44% month-on-month surge in May 2025 when the subsidies were in full effect. The shift in consumer behavior was visible in the surge of secondhand purchases: ATRenew, a preowned electronics platform, said sales of used products jumped nearly 80% during the 618 period.
The spending weakness contrasts with continued strength in China's export and technology sectors, widening a divergence that Goldman Sachs warned could persist. The firm lowered its second-quarter GDP growth forecast to 4.5% from 4.7%, while keeping its full-year 2026 outlook unchanged at 4.7%.
"AI-related job displacement could amplify macroeconomic headwinds and delay, if not derail, the recovery in the property market and household consumption," Goldman's Hui Shan said in a note Monday. The divergence between high-tech and consumption sectors is visible in both industrial production and capital market data, he added.
Beijing's push for fair competition has also reshaped the promotional landscape. Regulators scrutinized misleading marketing tactics this year, pushing platforms to replace complex discount bundles with simpler, single-item price cuts. The shift removed a key demand driver: in previous years, "billion yuan" subsidy campaigns by Alibaba, Pinduoduo, and JD.com had drawn price-sensitive shoppers into spending sprees. Without those incentives, consumers proved harder to convert.
The implications extend beyond e-commerce. China's consumer discretionary sector faces a challenging second half as price-sensitive households prioritize savings over spending. The 618 data suggests that even deep discounts and simplified promotions are insufficient to reverse the mood. For global investors, the slowdown reinforces questions about the durability of China's consumption-driven recovery — a theme that will be tested when July retail sales data and second-quarter GDP figures are released in the coming weeks.
This article is for informational purposes only and does not constitute investment advice.
