A STUDY ON THE IMPACT CHANNELS OF COVID-19 ON THE RETAIL SALES OF CONSUMER GOODS IN CHINA

Abstract

After the outbreak of coronavirus, the Chinese economy and consumption have been negatively affected. First, our study qualitatively analyses the impact channels of the Covid-19 on consumption. Theoretically, in addition to the direct impact of different levels of lockdown measures on consumption, the Covid-19 also negatively impacts consumption through income effect, wealth effect, and actual purchasing power effect. Secondly, this paper uses macro data to conduct quantitative research. We set the VAR model to analyse the relationship between the consumer price index, lockdown variable, and the total retail sales of consumer goods. What’s more, we set a control group to discuss how the lockdown measures may affect consumption. The result of our Wuhan model shows that there is no short-term relationship between Wuhan’s CPI and Wuhan’s retail sales of consumer goods. In contrast, the lockdown measures could affect consumption. And Chengdu’s model also shows similar results. However, the coefficient of the lockdown variable in Wuhan’s model is much higher than the coefficient of lockdown variable in Chengdu’s model because of the different lockdown levels in these two cities.