Good News For Alibaba, JD In China’s Growth Forecast
China’s economy expected to expand 6.5% in 2018
China projects its economy to expand by ~6.5% in 2018. China’s 2017 growth of 6.9% exceeded the government expectation of 6.5%.
In 2017, heavy government spending on infrastructure was viewed as a major driver of the year’s robust economic growth. Based on the government’s 2018 growth target, its spending on infrastructure development is expected to continue.
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Boosting consumer spending
Government spending will increase the money supply to the economy, which could boost Chinese consumers’ income and purchases, benefiting China’s retailers and providers of digital products aimed at consumers. China’s consumer price index is expected to rise ~3.0% in 2018. Heavy government spending last year brought good tidings for many of China’s Internet companies, which registered double-digit revenue growth in 2017.
JD’s revenue rose 40% in 2017
Alibaba (BABA), China’s leading e-commerce company, recorded a 56% increase in revenue in 2017. JD (JD), Alibaba’s challenger in China’s e-commerce sector, saw its revenue rise 40.3% in 2017. Alibaba and JD are expanding into grocery retail, a strategy that could allow them to tap into more family spending on everyday items.
Baidu (BIDU), China’s leading Internet search engine provider, posted a 20% increase in revenue in 2017. At Sina (SINA) and Sohu (SOHU), China’s leading digital media companies, revenue grew 54% and 13%, respectively.