China's retail market will become the largest in the world, exceeding sales in that of the United States in 2019 and topping $6 trillion in 2020, an analysis says.

Online retail sales in China continue to exceed—and grow faster than—those in the United States, according to official Chinese government data released this week.

Online retail sales in China totaled about $1.33 trillion (just over 9.00 trillion yuan) in 2018, an increase of 23.90% compared with 2017, according to the National Bureau of Statistics of China, a government agency. Of that total, sales of physical goods were $1.03 trillion (7.00 trillion yuan), up by 25.40%. Online sales of physical goods accounted for 18.40% of the total retail sales of physical consumer goods, up 3.4 percentage points, the agency reported.

E-commerce is gaining market share in China at a time when overall retail spending is growing and contributing the bulk of gross domestic product (GDP) growth. Total retail sales of consumer goods in China reached $5.61 trillion (38.10 trillion yuan) in 2018, up 9.0% over 2017, the Chinese government data says. Final consumption expenditures—spending on goods and services to satisfy individual needs—contributed 76.2% to 2018 GDP growth in China, up 18.6 percentage points from 2017, according to the bureau.

China’s e-commerce sales have exceeded those in the United States since 2013; but so far, the U.S. retail market as a whole has been larger than that in China, making the United States the world’s largest retail market. The federal government shutdown has delayed the release of December retail data from the U.S. Department of Commerce, but U.S. retail sales for 2018 appear on track to easily exceed those in China. For the first 11 months of 2018, total retail sales in the United States were $5.54 trillion.

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However, 2019 could be the year the Chinese retail market pulls ahead to claim the No. 1 spot, according to research firm eMarketer Inc.

Excluding travel and event ticket sales and Hong Kong retail sales, retail sales in China were $5.24 trillion in 2018, just lower than comparable U.S. retail sales of $5.35 trillion, the eMarketer analysis says. For 2019, eMarketer expects Chinese retail sales to edge ahead of those in the United States. By 2022, retail sales in China will grow to $6.76 trillion compared with $6.03 trillion in the United States.

By the end of 2019, China will represent 55.8% of global online retail, eMarketer projects.

Alibaba Group Holding Ltd.—which includes Alibaba.com, along with the Taobao and Tmall online marketplaces and other holdings—dominates e-commerce in China with a 53.3% market share, eMarketer says. Taobao and Tmall hold the No. 1 and No. 2 spots on the Internet Retailer Online Marketplaces. Alibaba is followed by JD.com Inc., (No. 5 in the Online Marketplaces list). which has a market share of 16.0% and Pinduoduo Inc., which has a 7.0% share.

Other leading players include Suning (3.6% market share), Vip.com (1.4%) and Gome (1.2%).

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It appears Chinese consumers are becoming more status-conscious and savvier, which could contribute to the growth of e-commerce. An analysis published in December by The Nielsen Co. found that 39% of Chinese consumers are willing to “buy products of better quality with relatively higher prices.” On the other hand, 24% of consumers in China will look for good deals on the products they want. Also, 31% say they will buy retail memberships that offer discounts and 65% will use group-shopping services and other platforms that offer lower prices.

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