Economists deny China is experiencing ‘consumption downgrade’

By Zhao Yusha Source:Global Times Published: 2018/8/27 21:53:39

Chinese consumers complain they feel the pinch of a ‘slowdown’

As the Chinese public complains online that they are feeling the pinch of an economic slowdown and coined the term "consumption downgrade," economists said Chinese consumers are actually optimizing the consumption structure and looking for a healthier and wiser way of life.

An article which circulated on the Chinese internet entitled "Young people, prepare for hard times ahead," written by blogger Ma Ning, received 1.85 million views on Sina Weibo, Chinese version of Twitter.

The article claimed that Chinese consumers are struggling to find a cheaper way to satisfy their daily cravings, such as buying avocados from open fairs rather than in supermarkets and using a resold gym card to get a workout, as prices soar and incomes shrink.

At the end of the article, the author suggests that readers read more instead of "going to bars and shopping… during hard times."

"I have replaced La Mer cream (which costs about 1,000 yuan ($146) per bottle) with Dabao (a domestic cosmetic brand which sells for 30 yuan), and haven't bought coffee at Starbucks, which used to be my daily routine, for a long time, said William Hoo, a Beijing-based internet start-up owner.

"I am already in a 'consumption downgrade' society without even noticing," said Marsha Hu, who works in an overseas bank in Beijing.

Retail sales in China reached 1.8 trillion yuan in the first five months of the year, an increase of 9.4 percent compared to the same period last year, the National Development and Reform Commission (NDRC) said.

However, the growth rate was 0.8 percentage points slower than the same period last year.

The slowing retail sales growth is the result of slower increases in income, the volatile stock market and real estate bubble, said Xu Hongcai, deputy chief economist at the China Center for International Economic Exchanges.

However, Xu said the term "consumption downgrade" is inaccurate. "Chinese society is experiencing a consumption upgrade because consumers have shifted to services, which improve their lives," he told the Global Times.

The Chinese made 2.8 billion trips within the country in the first half of the year, an increase of 11.4 percent compared to the same period last year, and people 39.3 percent more on sports activities, according to data published in July by the National Bureau of Statistics.

The term "consumption downgrade" raised public concern because consumption is one of the keys to boosting economic growth, Xu said.

China will further release the potential of domestic market and expand domestic demand, Cong Liang, the NDRC spokesperson said earlier this month. The consumption mechanism will be further improved to keep up with upgraded consumption needs, and provisions for high-quality products and services will be increased, Cong said.

Newspaper headline: Economists deny ‘consumption downgrade’

Posted in: SOCIETY

blog comments powered by Disqus