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China’s economic slowdown weighs on consumer spending


Until the Chinese stock market crashed in June, Shanghai stockbroker Wang Yu had been planning to spend Rmb60,000 ($9,400) on a diamond engagement ring. When it came time to propose in October, he offered a Rmb4,000 gold ring instead.        


Mr Wang's tempered extravagance is one example of how Shanghai's consumers may be cutting back in the face of economic uncertainty, with implications for the broader Chinese rebalancing story.         



Despite a sharp slowdown in economic growth and the stock market crash, consumers in China's commercial capital have proven resilient, according to FT Confidential Research, a research service from the Financial Times. A survey of consumers across the city found they spent an average Rmb4,959 a month over the past 12 months, compared with Rmb1,737 across urban areas nationwide. They increasingly favour a quality meal and foreign goods, while nearly 70 percent said they travelled abroad during the past 12 months.         

根据英国《金融时报》旗下研究服务部门“投资参考”(FT Confidential Research),尽管中国经济增长大幅放缓,股市暴跌,事实证明中国商业首都上海的消费者们依然保持活力。一项覆盖全市的消费者调查发现,过去12个月中,他们每个月平均支出4959元人民币,而全国城市地区的平均值为1737元人民币。上海消费者日益青睐优质膳食和外国产品,近70%的人表示他们在过去12个月中曾出过国。 


But cracks are appearing in the Shanghai consumer story. Spending on luxury goods, the most conspicuous symbol of Shanghainese consumption, may be on the wane. While 53.2 percent of respondents said they intend to increase spending on luxury goods in the coming 12 months, the average intended spend fell to Rmb6,454 from Rmb7,596 in the previous 12 months.         



Furthermore, just 18.7 percent said they intend to increase spending in the coming 12 months. Among wealthy residents, 60 percent said they intend to hold spending steady against a citywide average of 58.4 per cent.     



Their caution is understandable: 43.4 percent of respondents said they expect the economy to worsen in the coming 12 months, while only 36.7 percent said conditions will improve.         



Shanghai's citizens may still be spending, and the survey found — crucially — that incomes are still rising. But these notes of caution are yet more correctives to the widespread notion that the Chinese consumer will swing to the rescue of the national economy as the traditional drivers of growth slow.         



The established narrative sees a relatively smooth rebalancing away from capital intensive industries as consumer spending takes up the slack.         



But this gauge of Shanghai consumer habits is among a growing pile of data that indicate the slowdown in traditional industries is weighing on Chinese consumer spending, regardless of what is shown by the much-trumpeted rise in the official monthly retail sales indicator.         



Far from filling the breach and propping up growth, the Chinese consumer's willingness to spend will continue to deteriorate until sectors such as construction come back.         



The future Mrs Wang has become an unwitting victim of the economic slowdown.         



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