China’s middle class does not ‘dare to spend’ until post-Covid economy shows clear signs of recovery

Millions of middle-class Chinese citizens are currently holding back on their spending, awaiting a more stable economic recovery post-Covid. The Chinese leadership has outlined key tasks for the upcoming year, including reducing unemployment and enhancing public wealth growth. Despite having substantial savings and access to VIP services from wealth managers at banks, many affluent Chinese citizens are hesitant to invest or spend as they did before.

A small-business owner named Huo, based in Shenzhen, a technological hub in southern China, expressed his concerns about the current economic climate. He stated that due to the slump in the stock market and real estate, along with the shrinkage of various investment types, people are reluctant to spend. He further added that the economy's poor performance has led to widespread worry about the future, thus discouraging spending. Official data supports Huo's pessimistic outlook, with property sales by floor area in the first 11 months of 2023 falling by 8 per cent year on year. Compared to 2019, the decline was more than 32 per cent.

However, retail sales saw a rise of 10. 1 per cent in November, indicating a continued rebound after a dismal second quarter. This increase is primarily due to the low base of comparison from the previous year, which saw massive lockdowns in many cities due to China's strict zero-Covid restrictions. Luo, a textile and furniture export firm owner also based in Shenzhen, sees a glimmer of hope in the past few months. However, he believes that it's still early days and the rebound won't be quick as it will take several months to place orders and deliver products.