U.S. GDP growth has been hovering around 2.5 percent, while in China, it’s a little more than three times as much. It’s at 7.6 percent, which sounds pretty good, by comparison.
But that number has the Chinese — officials and the average person — worried. After years of double-digit growth, China’s economy is slowing down. It’s now in danger of falling short of the government’s annual target.
What’s this look like on the ground? Marketplace’s China correspondent Rob Schmitz checked back in at the Street of Eternal Happiness to see how business owners there were faring. One man, Mao Guoqiang, has had a men’s clothing shop on the street for 10 years and says his business has never been this bad. He’s being squeezed on both ends: As wholesale clothing prices are going up — thanks to rising raw material costs — customers also want to spend less, leaving him with less profit.
The trend isn’t just found in Shanghai though — it’s all around China, with not just shopowners but everyone being affected.
And while many statistics coming out of China continue to show positive signs, household income isn’t one of them. Growth in urban household income in China fell by more than 3 percent in the past year — and that means less and less money for consumers to spend on items.
That might put a damper on the plans President Xi Jinping has for the country: to shift China’s economic growth model from one dependent on building things and exporting things to a model closer to that of the United States, which is more dependent on consumption for economic growth.
The slowdown also means similar problems for the slew of U.S. retailers who are placing their bets on this rising consumer class in China for their future growth.
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