Once prolific shoppers, Chinese consumers have in recent years cut back on spending. - ST
SHENZHEN/CHONGQING/BEIJING: As crowds throng restaurants, malls and tourist attractions during China’s ongoing week-long national day holidays, business owners and policymakers across the country have their sights trained on one thing: reeling in the elusive consumer dollar.
Chinese leaders have been on a sweeping drive to shore up an economy hamstrung by weak domestic demand. Since late September, they have rolled out a raft of aggressive stimulus measures and pledges, which have fuelled market optimism and sent Chinese stock prices surging.
Seeking to translate this bullish sentiment into the real economy, the local authorities across the country have dished out consumption vouchers to promote spending, while stores selling items from clothes to jewellery have dangled discounts.
But despite the holiday buzz, shopkeepers whom The Straits Times spoke with on Oct 2 say they have not yet seen increased consumer spending across the board.
Once prolific shoppers, Chinese consumers have in recent years cut back on spending, wary of an uncertain economic outlook and spooked by falling prices of the real estate properties and stocks in which they store wealth.
This thrift – also called a “consumption downgrade” – has been a drag on the world’s second-largest economy, and has contributed to deflationary pressures that weigh on its growth trajectory.
China’s economic growth slowed in the second quarter of 2024 to 4.7 per cent year on year, sparking concerns about its ability to meet a 5 per cent growth target for the year. Retail sales – a measure of consumption – underperformed analysts’ expectations in August to grow just 2.1 per cent year on year.
Following the recent policy announcements and stock market rally, Shenzhen resident Zhang Jinshuo, in his 30s, found himself slightly richer on paper after his shares gained value over the past week, but remains a cautious spender.
“Nowadays, money is hard to earn, so I spend more carefully,” said the owner of a small information technology company, who was visiting an upscale mall in the city “just to walk around”. He has yet to fully recoup his investments following the stock market slump of the past few years.
China’s national day holidays, which run from Oct 1 to 7, typically see large volumes of travel both at home and abroad, during which people shell out more money than they would on an average day.
To boost spending during this period, some localities have rolled out coupons that can be redeemed to offset spending on certain categories of items, while merchants too have offered an array of discounts.
For instance, Shanghai city’s government is bankrolling 500 million yuan (S$92 million) in consumption vouchers to subsidise expenditures such as eating out, hotel stays and movie-going. These will be released in batches from these holidays till the end of the year.
China’s railway network saw a record high of 21.4 million passenger trips on the first day of the holidays, the state media reported.
More than 331 million inter-city trips were made on Oct 1 – up 0.9 per cent from 2023 – and these are expected to reach 1.94 billion over the course of the week, the Transport Ministry has said.
The passenger trips have translated into large crowds gathering at major attractions and shopping streets across the country.
On the evening of Oct 2, the narrow streets around Beijing’s historic Bell and Drum towers – popular with sightseers – were bustling with people taking photos and queueing outside restaurants.
“Fresh ingredients,” hollered a restaurant employee to prospective customers from atop a stool. “Guaranteed yummy!”
On the same day in Chongqing, a western Chinese city popular with domestic tourists, crowds thronged attractions such as the famed Jiefangbei pedestrian street. And in southern Shenzhen, malls in central Futian district were buzzing, with eateries packed full of people.
But despite the heavy footfall, many shopkeepers whom ST spoke with – particularly outside the food and beverage industry – said that this has not led to better business for now.
At a hotpot restaurant in Chongqing’s Jiefangbei, waitress Qu Hui, 28, said: “So far, the sales are only matching last year’s figures, though the crowds are definitely bigger than those in 2023.
“But it is just the second day, so we are optimistic that sales will pick up as we head towards the weekend.”
At a stall near Beijing’s Drum Tower, a vendor selling Chinese crepe (jianbing) described crowds in 2024 as being smaller than he recalled in pre-pandemic years.
“Business is okay, people always like to buy jianbing as a supper snack. But I thought there would be more people this year,” said the seller, who wanted to be known only as Liu.
Meanwhile, vendors of items such as clothing, perfume and fake nails in Chongqing and Shenzhen told ST that holiday sales thus far had fallen below their expectations.
Despite discounts of up to 40 per cent, “people just walk one round (in the store), then leave”, said an assistant at a sportswear store in Shenzhen’s Futian, who declined to be named.
“There are a lot of people, but they are not buying much,” concurred a vendor of fake nails at another mall in Shenzhen.
Data on overall spending over the holidays – an early indicator of consumer sentiment following the recent policy blitz – has yet to be released.
Consumers whom ST spoke with had varying accounts of their willingness to spend over the week-long break.
In Chongqing, tourist Shark Yang, 32, said he had cut his holiday budget by 20 per cent because sales have been poor at his workplace, a bar in southern Guangxi autonomous region. He added that he was returning to work over the weekend – enticed by the promise of more pay from his boss – because “in this economy, every dollar counts”.
But in Shenzhen, consultant Michael Lin, 26, was looser with his purse strings. “I made a bit of money in the stock market, so I bought a computer,” he said.
Analysts expect that China’s release of pro-growth economic policies, which began in late September, will continue after the national day holidays – and are closely watching the shape and form that an anticipated roll-out of fiscal stimulus might take.
A potential fiscal package could include more funds to directly boost domestic consumption, following the disbursement of 300 billion yuan earlier in 2024 for a programme to support the trade-in and upgrade of goods and equipment, said analysts. - The Straits Times/ANN
