The story appears on

Page A3

January 21, 2016

GET this page in PDF

Free for subscribers

View shopping cart

Related News

Home » Business » Finance

Growth concerns as shoppers look to trim spending

CHINESE shoppers, who largely propped up growth last year, are likely to trim spending this year; dining out less often, delaying smartphone upgrades and cutting out impulse buys.

China’s economy grew at its slowest rate in a quarter of a century last year, and analysts credited consumers with keeping growth at least on track with government targets.

“Chinese consumers came to the rescue in 2015,” wrote Tom Rafferty, analyst at the Economist Intelligence Unit in Beijing. “Their spending helped offset weakness in industry and investment, the traditional drivers of the Chinese economy.”

There’s no guarantee they’ll do the same again this year.

A survey by ANZ bank published yesterday showed Chinese consumer confidence at a record low this month, and data from US-based research group’s China Beige Book showed fourth-quarter job growth and wage gains at four-year lows.

Those surveys were echoed by shoppers canvassed by Reuters in Shanghai, who said they would keep their spending in check and more likely cut back.

A man surnamed Zhou said he and his girlfriend spent around 70,000 yuan (US$10,642) last year dining out and another 40,000 yuan on clothes and accessories. He said they plan to cut back by nearly a third this year given the economy. “We’ll cook more at home. I may replace my electronic products like mobile phones less frequently,” he said.

“I think the growth of my income cannot catch up with surging prices,” said a 30-year-old shopper surnamed Zheng as she browsed through a store’s mugs and bedsheets. “These things aren’t necessary. I might control myself a little bit ... try not to go shopping too often.”

Harder hit may be China’s swelling ranks of the elderly, who are seeing health costs eating into disposable income. One woman who declined to give her name said she was having to spend most of her money on air filters to combat urban air pollution. “I’d rather save money in case I’m sick and have to go to hospital,” she said.

Caught in the squeeze, too, are China’s many small retailers, consumers themselves, who are dependent on domestic demand for their survival.

A mobile phone store owner in Shanghai surnamed Dong said sales declined sharply in the second half of last year.

“It’s strange and I don’t really know why. Maybe because the stock market crashed. I think it will be worse in 2016.”

Economists are warning that consumers will have less money to spend if, as seems likely, wages flatten and unemployment begins to rise this year.

Also, Chinese buying power, at home and abroad, may weaken as the recent depreciation of the yuan could impact prices of the many imported products sold in China.

“We expect consumer spending growth to ease this year as wage increases moderate and the risk remains that the weakness in industry could spill over more forcefully into consumption,” wrote Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong.

China’s National Bureau of Statistics said consumption’s share of GDP growth jumped more than 15 percentage points to above two-thirds last year, helping offset a slowdown in the vast manufacturing sector.

In a bid to boost private consumption, the State Council said in November it would encourage financial institutions to accept a broader range of collateral for extending loans to “lifestyle-related businesses” such as retail, health, travel and sport.

“Business was bad in the past year and it’s impossible to go up,” said a dress shop owner in Shanghai. “The rich will buy luxuries, the poor will save their money.”




 

Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.

沪公网安备 31010602000204号

Email this to your friend