Chinese Consumers Not Ready to Spend
China’s economy is showing signs of shaking off the lockdown, with mines and factories back in production at or near pre-pandemic levels, according to a variety of Chinese government statistics.
But, in large measure, consumers are not yet ready to return to their old ways of spending.
Many in China’s young “spending class” had never faced a recession in their adult lives. China’s economy has been a powerhouse for more than 30 years, never encountering a severe recession.
Now many of these workers have lost jobs that may not return. Other workers have burned through savings while idled for weeks at home.
For them, the need to rebuild savings or hoard money against future hardship has become more urgent than a new wardrobe or vacation trip abroad.
Retail sales fell about 16 percent during this year’s first quarter compared to last year’s. Sales of appliances, clothing, furniture, and jewelry all were down 25 to 33 percent in March compared to a year earlier.
Also, unemployment may still be near 20 percent if migrant workers from rural areas are counted.
Earlier in this century, the Chinese government began shifting its economic emphasis from public infrastructure projects and industrial construction to a consumer economy.
Now that the consumer economy is stalled, many economists are urging the government to do more to stimulate spending. Officials are reluctant, however, to take on new national debt.
Meanwhile, consumers are holding onto their cash.
“As long as the money is in your wallet, there is a strong sense of security,” said a 22-year-old Shanghai bartender. “You don’t have to spend it. You feel comfortable just opening the wallet and seeing it.”
