China reports that its economy grew 8.1% last year compared to 2020.
Part of that growth was generated by exports to Americans who were stuck at home and bought more furnishings, electronics and other goods from China.
Inside China, retail sales grew 12.5% in 2021. The figure is a proxy for consumption, but consumer spending isn’t recovering as fast as it seems.
China’s National Statistics Bureau said retail sales increased only 3.9% last year if you compare them to pre-pandemic figures in 2019.
Consumer spending has been sluggish since the summer, in part because there were mass layoffs in sectors like education.
Then there’s China’s zero-COVID policy. Entire cities have gone into lockdown for just a handful of cases and travel has become unpredictable.
So, Chinese consumers stayed put. Restaurants and catering sales went up by 18.6%.
Unlike in the U.S., consumers in China have not been handed money by their government. Those in low-skilled jobs are most vulnerable because a sudden lockdown can cut their monthly wages in half.
It’ll be hard to get consumers to spend more this year.
People are now being discouraged from traveling to their hometowns for the upcoming Lunar New Year holiday — normally peak consumption time.
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