Chinese rich consumers’ appetite for luxury products remains robust this year, with strong growth in purchasing power among the younger generations, according to an industry survey by Ruder Finn and Consumer Search Group. The 2019 China Luxury Forecast surveyed 1,075 consumers in more than 130 cities on the Chinese mainland and 310 consumers in Hong Kong. About 46% of the survey respondents from the mainland and 32% from Hong Kong said they plan to spend more on luxury products in the next 12 months. Rich Chinese consumers spent an average of CNY240,000 on luxury items in 2018. The average annual income of the households surveyed was CNY1.4 million on the Chinese mainland and HKD975,286 in Hong Kong.

“What has remained unchanged over the past 10 years is that China and Chinese consumers are on an overall upward trajectory,” said Gao Ming, Senior Vice President and General Manager of National Luxury Practice, China, Ruder Finn Asia. Gao noted several key trends in the market, including digitalization of communications and marketing, as well as the massive increase in purchasing power among the region’s younger generation. Millennials have been the key consumer target group for almost every luxury brand over the past two to three years. The report found that total spending on luxury goods was on average higher among millennials aged between 26 and 35 over the past 12 months in China. Chinese mainland consumers purchased a higher amount of clothing, shoes and beauty products online, with over 70% saying they would be willing to buy any luxury item, except automobiles, online. They said they prefer to purchase goods from Chinese e-commerce firms JD and Tmall.

Luxury goods consumers mainly use digital channels to obtain brand and product information, the report said. Digital channels are dominant in China, as four of the nation’s leading information channels are all digital. Clothing and jewelry products were at the top of consumers’ overseas shopping lists this year. Half of the consumers surveyed said they plan to spend more on clothing in the next 12 months. Chinese consumers focus heavily on shopping, allocating nearly 30% of their total travel budget. On average, rich consumers from the Chinese mainland made 2.8 international trips over the survey period.

The report advised that, against the backdrop of market volatility, brands cannot rely on a one-size-fits-all approach. Rather, “companies must fully tap the wide variety of consumer market opportunities in order to successfully engage with the changing face of Chinese luxury consumers,” Gao said, as reported by the China Daily.

China has confidence in its ability to maintain stable trade growth in 2019 thanks to a raft of positive factors. “Looking ahead, despite the complex environment, we still see many favorable factors for the stable development of foreign trade in 2019,” Chu Shijia, Director of the Comprehensive Department of the Ministry of Commerce (MOFCOM), told a conference. The gradual recovery of the global economy, China’s opening-up efforts and pro-trade policies, accelerating industrial upgrading and improving corporate vitality will lend strong steam to the country’s trade growth this year, Chu said.

China’s foreign trade in goods surged faster than expected to a record high last year, totaling USD4.6 trillion, up 12.6% year-on-year, faster than that of major trading nations. It made China the world’s largest trader in goods. MOFCOM noted growing trade with Belt and Road countries, more high-end exports and accelerating imports growth. Trade with the countries along the Belt and Road rose to 27.4% of the total. The private sector accounted for 48% of total exports, making it the largest single source of exports. China has continued to push foreign trade growth, setting up 22 new comprehensive pilot zones for cross-border e-commerce.

According to World Trade Organization (WTO) statistics, China’s share of global imports increased by 0.7 percentage points to 10.9% in the first three quarters of 2018, and the country’s contribution to global import growth was 16.8%. In particular, last year’s inaugural China International Import Expo provided new opportunities for countries and regions around the world to expand exports to China and injected new impetus into world economic growth.

Global direct investment fell 19% in 2018 from a year earlier, but increased 3% in China to USD134.97 billion. Foreign investors are also increasing their investment in China’s commercial real estate market, surpassing CNY70 billion, up over 50% year-on-year, according to CBRE Group, a leading global commercial real estate service. Foreign investment accounted for about 60% of Shanghai’s major property deals in the fourth quarter of 2018, the Shanghai Daily reports.

China’s exports and imports both rose at a faster-than-expected rate in January, up 8.7% from a year earlier to CNY2.73 trillion. Exports rose 13.9% year-on-year to CNY1.5 trillion, while imports grew 2.9% to CNY1.23 trillion. The trade surplus expanded 1.2 times to CNY271.16 billion. The increase in exports was significantly higher than analyst forecasts, partly driven by front-loading by exporters before the Spring Festival, which fell at the beginning of February as compared with the end of February last year. In terms of regions, China’s trade with the European Union, ASEAN countries and Japan increased 17.6%, 7.8% and 6.5%. Trade with countries along the Belt and Road rose 11.5%.

Investment into China from the United States rose by 124.6% in January, with the hi-tech industry witnessing the most significant increase, from the Netherlands by 95.6%, the United Kingdom by 13.7% and Hong Kong by 6.5%.

Not artificial intelligence (AI) or semiconductor firms, but agricultural companies, have been advancing the most on the Shenzhen Stock Exchange. The agricultural sub-index has rallied more than any other in 2019, and is the only one to eke out a gain in the past three years as the city’s benchmark slid 22%. Analysts attribute the more recent gains to the likelihood of higher pork prices as African swine fever dents supply. And while trade tensions with the U.S. have affected the price of soybeans, which are used as animal feed, progress in talks could result in China importing more from America, lowering breeders’ costs, said Dai Ming, Shanghai-based Fund Manager at Hengsheng Asset Management. A pork producer stood out in Hong Kong too, with WH Group climbing more than 8% over a three-day period.

In another boost, the government has promised to support share listing and fundraising by qualified agriculture firms. “The agriculture sector has had a totally different story to technology firms over the past few years,” said Sun Jianbo, President of China Vision Capital Management in Beijing. “China is still at the early stage of large-scale farming and, with this trend picking up, the sector’s revenue is growing steadily.” Muyuan and Wens Foodstuffs Group, another meat producer, have more than doubled their profit since 2014, though they have yet to report 2018 earnings. Wens Foodstuffs has risen 16% in Shenzhen this year, about half the advance by Muyuan, which has driven much of the Shenzhen agricultural gauge’s advance over the past three years as it more than tripled in value.

Gains in farming-related stocks have made them much more expensive. The agriculture gauge in Shenzhen trades at about 49 times reported earnings – more than double the broader index – according Bloomberg. Meanwhile, technology companies “have seen the business environment worsening”, Hengsheng’s Dai said. “For example, the smartphone supply chain is seeing intensifying competition and shrinking margins.” After years of breakneck expansion, global smartphone makers are grappling with slowing revenue growth. Apple’s Chinese phone shipments plummeted by an estimated 20% in the final quarter last year, while Xiaomi fared even worse, research firm IDC said this week.

China Minsheng Investment Group (CMIG), a private company backed by dozens of the biggest Chinese firms and dubbed the “the aircraft carrier of China’s private companies” by local media has partly suspended trading of its bonds after missing a repayment. The case underlines the mounting pressure in the country’s USD11 trillion bond market, said analysts, as a liquidity crunch forces an increasing number of heavily indebted companies to the brink of default. CMIG has stopped taking bids for three of its bonds “due to recent price volatilities”, according to a filing to the Shanghai Stock Exchange.

One of the three bonds had plunged by more than 27% on February 11, as investors sold off amid concerns about CMIG’s financial condition. The company missed a deadline on January 29 to pay back a privately placed bond, worth CNY3 billion. Some of the investors still have not received their money, and CMIG has been negotiating with them for a repayment extension, sources said. The company faces more than CNY10 billion in payments for maturing debts and interest this year, according to data provider WIND. It had assets worth CNY310.9 billion as of the end of last September, but its net profit plunged by nearly 60% to just CNY1.6 billion.

In recent filings CMIG has been alerting investors to risks stemming from cash-flow stress caused by earlier mergers and acquisitions, and an underperformance in the solar energy sector, in which it has heavily invested. “Three billion yuan is a very small amount of money for a company like CMIG. The delay in repayment shows they have bigger problems to deal with,” said Wonnie Chu, Managing Director of fixed income at GaoTeng Global Asset Management. She said the Chinese government is becoming more tolerant of bankruptcies and defaults by companies “as long as it does not create systemic risks”. “There was a time when China tended to bail out all the defaults, but it is not the case since the supply-side reform, when Beijing emphasized ‘quality growth’,” Chu added. The crisis facing CMIG is widely shared by other Chinese private companies, said Ivan Chung, head of Greater China credit research and analysis at Moody’s Investors Service, as reported by the South China Morning Post.

CMIG was set up in 2014 by Chinese veteran banker Dong Wenbiao. Dong, former Chairman of China’s biggest private lender, Minsheng Bank, managed to persuade 59 of the biggest private companies to make initial investments in the company. The combined assets of those firms surpassed CNY1 trillion at the time. The ambition of CMIG was to make investments in strategic industries, with the backing of the country’s strongest entrepreneurs.

The number of corporate bond default cases surged to 119 in 2018, more than triple the 35 cases a year earlier. The value of defaulted bonds also tripled to CNY116.6 billion in 2018 from CNY33.7 billion in 2017, according to the data compiled by Wind.

New homes sales declined by 56% year-on-year in 17 major Chinese cities, including Shanghai and Nanjing, during the Lunar New Year holiday from February 4 to 9, in a sign that does not bode well for a sector already weighed down by a bearish outlook and concerns about a slowing economy. Investment bank China International Capital Corp (CICC) said Beijing’s easing stance on the overall economy boosted market sentiment in the beginning of 2019, but sales data from sample cities and developers shows “the fundamentals of the property sector have actually exacerbated”.

A survey of 14 cities by Huatai Securities found that only four cities had posted growth in sales year-on-year during the holiday period. On the other hand, Yangzhou in Jiangsu province, Fuzhou in Fujian province, and Zhaoqing in Guangdong province reported declines of 80% or more. Raymond Cheng, head of Hong Kong and China property research at CGS-CIMB Securities, said: “A major reason for the big slump is a high comparison base. In the beginning of 2018, sales were brisk and the common outlook was that the bull run would continue. A year later, the outlook is the opposite – sentiment has gone south.” Cheng once again forecast that for the whole year, China’s new home sales by volume will slump by 10%. Chinese property developers have already reported a decline in home sales for January. According to property consultancy CRIC, the top 10 developers in terms of sales volume reported a 15% year-on-year decline in combined contracted sales. Sales at the top three developers, Country Garden, China Vanke and China Evergrande Group, contracted by 28% or more in January.

The drop in home sales has been accompanied by a decline in spending on cars, travel and other sectors. Retail and catering revenue rose by 8.5% during the seven-day Year of the Pig holiday, according to China’s Ministry of Commerce (MOFCOM), the lowest rate since the government began publishing holiday sales data a decade ago. National tourism revenue growth also slowed to 8.2%, the first instance of single-digit growth since 2008.