In China Businesses Cut Prices as Consumers Spend Less - The New York Times - 0 views
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The shift to thrift is a worrying sign for China’s leaders, who need people to spend more. To stimulate growth, policymakers are banking on an increase in domestic consumption as an alternative to the boom-or-bust cycle of infrastructure spending and real estate investment that has left local governments and developers awash in debt.
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“Chinese people actually don’t have a lot of money in their pockets, so the policy of relying on people’s consumption to promote China’s economy hasn’t been successful,” said He-Ling Shi, an associate economics professor at Monash University in Melbourne, Australia. “With people cutting back on spending, it’s even less likely to succeed.”
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Instead of buying coffee at Starbucks, Ms. Chen said, she chooses between Luckin and Cotti based on “whichever is cheaper.” She used to use an expensive Japanese skin toner, but she switched to a Chinese brand that is 90 percent cheaper. She also stopped shopping at Victoria’s Secret for bras and underwear, choosing a no-name brand that costs $3 each.
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“The economic momentum has clearly petered out,” Ms. Chen said. “I don’t know what I want to save money for, but I just feel that having some money would make me feel more secure.”
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When China did away with its “zero-Covid” restrictions in December, there was anticipation that the economy would rebound from pent-up demand. But confidence began to wane from a deepening real estate crisis and a steady stream of disappointing economic indicators. Consumer spending started to slow.From January to May, retail sales grew 9.3 percent from a year earlier. But growth slowed substantially starting in June and has not rebounded to previous levels.
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Even when pockets of spending picked up from pandemic lows, they remained far from pre-Covid levels.