Chinese Consumers Are Saving Rather Than Spending Amid Economic Downturn

Chinese consumers are reportedly feeling the effects of the country’s economic downturn.

This downturn, characterized by declining exports, a slowdown in manufacturing and a property slump, is impacting even members of the middle to upper class, who are known as a consumer powerhouse and targeted by global brands, Bloomberg reported Tuesday (Dec. 19).

The media outlet learned this in its survey of 20 college-educated individuals across five top-tier Chinese cities, according to the report.

The survey participants, all high-earning professionals, expressed concerns about job security, saying that has led them to cut back on non-essential spending and delay major purchases such as homes and cars, the report said. Instead, they are focusing on saving more money for the future.

These interviewees reported feeling apprehensive, indicating that a large portion of China’s 1.4 billion consumers may also be experiencing similar concerns, Bloomberg noted.

The spending cutbacks by the middle class will have a ripple effect on international companies that rely on Chinese consumers, as millions of small spending decisions accumulate and collectively deliver significant shocks, according to the report.

One survey participant, a 40-year-old software engineer in Shanghai, has reduced impulsive spending due to job cuts and pay reductions, the report said. Even high earners are concerned about their future job prospects and have stopped buying expensive items.

Another survey participant, a 34-year-old working in financial product sales, is anticipating a significant bonus cut and experiencing a decline in their investment portfolio, per the report. This has led to a psychological hit and a decrease in discretionary spending.

The middle class is also prioritizing savings and seeking safe investment opportunities, according to the report. Chinese households have added 13.8 trillion yuan ($1.89 trillion) in savings in the first 10 months of the year, an 8.5% increase from the previous year.

It was reported in June that China’s lifting of COVID-19 restrictions had not been enough to boost consumer spending. Weak consumer confidence bogged down the initial rebound that took place after the country ended its pandemic-era lockdowns in December 2022.