Chinese Consumers’ Confidence Sags, Casting a Pall Over the Global Economy


HONG KONG — For years, it doesn’t matter what was taking place elsewhere, world corporations guess billions upon billions of that China’s shoppers would maintain spending cash.

Now, simply when the world economic system might use their monetary firepower, they’re now not so fast to open their wallets.

The newest signal of a slowdown in spending in China got here Wednesday, when Apple unexpectedly slashed its monetary forecast, citing disappointing iPhones gross sales in the nation. The weak point adopted reams of different information — declining automobile gross sales, lagging retail spending, a slumping property market, a harder job market — that counsel Chinese shoppers could also be shedding their as soon as unshakable confidence.

That might have a large impression on a world on the lookout for engines of development, on corporations that counted on China’s persevering with enlargement and on world buyers who’ve lengthy seen China as a regular supply of income.

Declining business confidence, rising labor costs and the trade war with the United States also appear to be hurting the job market.

China does not disclose reliable unemployment data. But a recent survey by Mr. Collier of job postings, recruitment ads, numbers of applicants on recruitment websites and interviews with corporate managers suggested labor demand had weakened significantly. Hiring demand in import and export industries has been hit especially hard, falling 53 percent in the third quarter compared with a year earlier, the survey found.

Against that backdrop, it is not surprising that many consumers are looking for ways to spend less.

Wang Xiaochuan, who made about $145,000 a year as a pharmaceutical sales representative in Yantai in 2015, now makes less than a third of that thanks to a tightening of regulations on the drug industry. He has cut back his spending, buying Clarks shoes instead of the more expensive Ecco brand, or Coach goods rather than Louis Vuitton.

“I’m hearing a lot more bad news about the economy than good news now,” he said.

In a country with an aspirational culture that for decades has encouraged people to get rich, Apple has long held a special place. Having a new iPhone meant its owner had made it. Seven years ago, the release of a new iPhone set off scuffles in front of an Apple store in Beijing.

But price increases have put the iPhone beyond the reach of more and more Chinese buyers. An iPhone XR starts at 6,499 yuan, or about $950, just over two and a half months’ worth of disposable income for the average Chinese person.

Rumors once circulated about young people selling kidneys to buy an iPhone. Now, the online joke goes, it would cost two kidneys.

On the last day of 2018, William Tan, a 30-year-old university teacher in the southern city of Nanning, replaced his iPhone 7 with a phone made by Huawei, the Chinese telecommunications giant. Although the Huawei phone cost more than $700, about a month’s salary for him, it was still more than $200 cheaper than the base iPhone XR. He had used an iPhone 5, 6 and 7. But when his iPhone 7 broke down, he found he could no longer afford the latest iPhone.

The Huawei phone, he said, works fairly smoothly and takes better photos than the iPhone.

“I won’t choose Apple again at this price range,” he said.

Chinese consumers are by no means done with certain discretionary purchases, as spending on movie tickets and services remains strong, economists said. But the consumer slowdown could worsen if Beijing does not address its economic problems.

“The question is whether China can stabilize economic growth when it is facing economic headwinds,” said Wei Li, senior China economist at Standard Chartered.

“If the labor market does worsen in 2019 or if financial conditions don’t improve, if the stock market remains low, all this could weigh on consumer confidence,” Mr. Li said.

For now, many Chinese spenders will most likely continue to scrimp.

Wu Yan, a tech company worker who was looking at Xiaomi phones on Thursday afternoon, said he had also tried Apple and Huawei phones and had decided they were not much different from one another. What matters, he said, was the apps, and they work the same from phone to phone.

But Mr. Wu, 40, also said many middle-class Chinese people like him had reached a stage where their work was stable, their income was secure and they no longer needed to show off their spending power. His computer at home? It’s four or five years old now, but it still works fine.

“Now we spend just to fulfill our needs,” he said.



Source link Nytimes.com

Get more stuff like this

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

Leave a Reply

Your email address will not be published. Required fields are marked *

Get more stuff like this
in your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.