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Customers are watching advertising reduction clothes of 80% or 70% in a supermarket in Hangzhou, Zhejiang province, in China, June 9, 2025.
CFOTO | Future publishing | Getty images
BEIJING – China consumption expenses show only few signs to resume soon, given uncertainty about future wealth, changing preferences and lack of social security net.
It was Four consecutive months of consumer prices dropConsumer confidence hovers near historic stockings, and the real estate market is struggling to turn around. Analysts repeatedly indicate a main factor: stagnant income.
Disposable income in China has half a growth rate since the success of the pandemic in 2020, now on average of 5% on average per year, Jeremy Stevens, an economist in Asia based in Standard Bank, said on Wednesday in Asia.
Most jobs do not give a large increase. In 16 sectors, only three – the operating services of public services and information technology – have seen wage growth exceed that of gross domestic product since 2020, he said.
Monthly commercial surveys for May have shown Labor market contraction Overall, especially when factories navigate American prices. The unemployment rate among young people aged 16 to 24 and not at school remained high in April at 15.8%. The official unemployment rate in cities has oscillated about 5%.
A record summit of 64% of Chinese households declared in the third quarter of 2024 that they prefer to save money rather than spending or investing it, according to a quarterly survey of the population of the Bank of China.
Although this was moderated at 61.4% in the fourth quarter, according to the last survey published in March, it reflected a trend of more than 60% of respondents preferring to save which was recorded since 2023.
And for respondents who planned to increase spending, Education was the higher categoryMonitoring of health care and tourism, according to the survey of the fourth quarter of the PBOC published in March.
More than half of the respondents considered the labor market to become more difficult or difficult to say.
Residents of China have been culturally inclined to save, especially since limited insurance coverage means that individuals often have to bear most costs of hospital treatment, higher education and retirement. Real estate ignition in recent years has also weighed on expenses, because property represents most of the wealth of households in China.
One way to make people more willing to spend is more than double pension payments, increasing the share of assets of the state paid to the Ministry of Finance, said Luo Zhiheng, chief economist of Yuekai Securities, in a note.
He added that the increase in public holidays and the supply of consumer vouchers in the service sector could also help.
In recent weeks, the Chinese authorities have intensified Further support employment And Improve social protection. But decision-makers avoided mass cash documents that the United States and Hong Kong have given residents to stimulate spending after the pandemic.
Leaving the pandemic, analysts warned that Retail sales in China would recover very slowly Because major uncertainties for consumers are not resolved.
During the decade before the pandemic, “Chinese consumers were arranged and capable of buying any innovation, even innovations that were not really innovations,” said Bruno Lannes, main partner based in Shanghai with consumer products and Bath & Company retail practices.
“In today’s world, they are more rational. They know what they want,” he said on a webinar on Thursday.
China should report retail sales for May on Monday. Analysts interviewed by Reuters predict a 4.9% slowdown in annual sliding growth, compared to 5.1% in April.
A gap of major cities
Another factor behind the negative readings of the IPC is that Chinese consumers are turning to less expensive products, benefiting in part from the overproduction of high quality products, either moving away from large cities in places where the cost of living is lower.
Shanghai lost 72,000 permanent residents last year, while Beijing saw a drop of 26,000, Worldpanel and Bain & Company underlined in a report Thursday. The two cities are generally classified as “level 1” cities in China.
Following the change of population, small cities classified as “level 3” and “level 4” experienced much higher growth in the volume and the value of daily necessities sold last year – helping to compensate for a drop in level 1 cities, according to the report. The study covered packaged foods, drinks, personal care and home care.
He found that if the overall volume of these goods sold in China increased by 4.4% last year, average selling prices dropped by 3.4%, because consumers preferred products at low prices and companies increased promotions.
The trend even influences flower sales.
The International Flora Auction Trading Center Kunming in the province of Yunnan, the largest Asian flower market, said in May that a larger demand comes from less affluent cities of lower level, resulting in higher volumes but higher average selling prices.
Businesses calmed down after the busy holiday season, Li Shenghuan, a flower seller near the shopping center, said on Friday. She said that the prices of flowers have dropped slightly, in part because more people have cultivated flowers. She expects the request to resume the holidays of the national day in early October.
For a feeling of disparity, the rural disposable income per capita is less than half that of cities for years, according to official data. The disposable income per capita in the urban areas of last year was 54,188 yuan ($ 7,553). It is much less than the $ 64,474 reported for the United States In December.
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Stevens de Standard Bank stressed that the consumption ratio in revenues in rural areas has “considerably increased” and exceeded pre-pale levels, while that of urban households has decreased. But he noted that low -income households do not have the extent of the wealth that high income groups make in order to significantly increase short -term consumption.
The highest 20% represent half of the total income and consumption in China and 60% of total savings, he said. “Political support for low -income groups, although well -intentioned, is insufficient without reform of structural wages.”
In addition, the rhetoric of “common prosperity” of China has introduced institutional realignments and political changes which, although well -intentioned, added to uncertainty, “said Stevens, noting that changes have” still fully found a new balance “.
