Chinese Consumers Aren't Spending Despite Lifting Of Lockdowns
Concern about COVID-19 has waned in the West, but it remains a major public health issue in China. Both the capital, Beijing and Shanghai have been subjected to months of intermittent but severe local lockdowns.
Photo Insert: The Nanjing Street shopping district in Shanghai
Moreover, despite some improvement in the covid numbers, the official strategy of "micro-lockdowns" and mass testing appears to be the new norm, The Economist editor-in-chief Zanny Minton Beddoes wrote.
They are meant to replace economically damaging citywide closures, but people's tolerance for constant disruption and government intrusion into their lives is already wearing thin.
On June 18, the date of the "618" shopping festival, one test of how quickly China's economy might recover from COVID-19 occurred. JD.Com, an online retailing behemoth founded on the same day in 1998, is promoting this.
The signs are not promising. Consumption appears to have been abandoned rather than postponed for many Chinese. Consumer confidence is at an all-time low. In May, retail sales fell by nearly 10% in real terms compared to the previous year.
China's retailers are hoping for a small victory from this year's 618.
After months of lockdowns and restrictions to contain another coronavirus outbreak, China's shoppers now have a little more freedom to move around and an opportunity to splurge, as Hermès did in April 2020, when it opened a new 511-square-meter shop selling luxury bags, scarves, and jewelry in Guangzhou, the capital of Guangdong province, following the first wave of lockdowns. According to Women's Wear Daily, shoppers spent at least 19 million yuan ($2.7 million) on the first day.
The Guangzhou store’s big day is a widely cited example of “revenge spending” in the wake of a lockdown. The term refers to the tendency of consumers to splash out after a period of enforced abstinence—overspending in an attempt to “get even,” hedonically if not financially.