On March 23, people were wearing masks at a main shopping area in Shanghai after the city’s emergency alert level for COVID-19 was downgraded (Photo by REUTERS/Aly Song)
According to a new survey, “revenge shopping”, also referred to a quick consumer rebound, is unlikely to happen in China for the second quarter of this year. More people focus on saving over spending following the coronavirus outbreak.
The survey reveals that more than half of Chinese households plan to increase their savings and cut back on spending after the outbreak is contained, while 40 percent will maintain normal shopping patterns and 9 percent intend to buy more. The survey sampled 28,000 people and was conducted by researchers from China’s Southwestern University of Finance and Economics.
The study was released last week and mainly surveyed users of Alipay, a popular mobile payment application developed by e-commerce company Alibaba, between late February and early March.
In the first quarter, household savings rose 6.47 trillion yuan (US$913.4 billion), up 6.6 percent from a year earlier and roughly equivalent to 70 billion yuan flowing into savings accounts every day during the period.
The coronavirus has hit the Chinese economy hard especially some small businesses and individuals in low-income households that earn less than 50,000 yuan per year. Nearly a third of people from poor families have reported a significant drop in their salaries. Around 55 percent of low-income families plan on saving more than they consume, compared to 34 percent of households earning more than 1 million yuan.
The report points out, “Because of the epidemic, the job instability of low-income groups surged, which in turn reduces their incomes. Without massive consumption stimulus, there is unlikely to be revenge shopping.”
The phrase “revenge shopping” was coined by Chinese social media in the hope of seeing a post-lockdown spending spree after the pandemic is contained. But weak consumer sentiment appears to be an obstacle to that, and will put more pressure on the government’s efforts to revive economic growth after it weakened to its slowest pace in decades in the first quarter.
In the first quarter, per capita consumption expenditure went down 12.5 percent in real terms from a year earlier to 5,082 yuan, according to the National Bureau of Statistics. Some local governments have distributed shopping coupons worth tens of billions of yuan to boost consumption, although their effectiveness is unclear.