China's domestic consumers are spending less and saving more as the country experiences stagnating economic growth, rising unemployment and a folding property sector. Since 1978, China’s GDP growth has averaged over 9% annually, and the World Bank estimates that this saw almost 800 million residents lifted out of poverty. With wealth came spending, and retail thrived alongside the wider economy.
However, a myriad of factors has plunged China’s economy into turmoil of late, and deflationary pressures mean that economic growth is slowing. It was recorded at 5.2% in 2023 and is projected to be 4.
5% in 2024. Mark Williams, chief Asia economist at Capital Economics, tells Just Style: “China’s consumers seem to be losing confidence in the economic outlook. A large share of their wealth is tied up in a housing sector that is collapsing.
Income growth has slowed dramatically, and leaves the future looking a lot less bright than it used to, with Western governments putting barriers up against imports from China.” The challenges have impacted China's consumers, many of whom are rethinking their spending priorities. While this spells good news for discount retail, the general reluctance to spend could in time result in oversupply, the scaling back of production and, ultimately, fewer employment opportunities with less money in circulation.
Discussing how demand deflation is shaping China, Freya Beamish, chief economist at TS Lombard, tells Just Style: “The non-government sec.
