During the two-month-long economic standstill caused by the coronavirus pandemic in the first quarter of 2020, many industries across China were hoping for a consumption spree after the outbreak to save their suffering businesses. Now that China has ended the lockdown in many cities as the outbreak is controlled, studies show that the rebound in spending, sometimes called “revenge spending”, that businesses long for may not come.
50.2% of the Chinese households surveyed said they will save more and spend less after the outbreak, while only less than 10% will do the opposite, according to the household wealth report written by Southwestern University of Finance and Economics and the research department of Ant Financial, the fintech subsidiary of internet giant Alibaba. Meanwhile, the remaining 40.4% of respondents, said they will maintain a relatively stable consumption level.
For many, household debts like mortgages and car loans loom, while household income is decreasing, said Chen Jianrong, a specialist in catering services interviewed by 36Kr. The vast majority of companies are unable to increase salaries as they had done previously, as they are forced the resort to pay cuts and layoffs to save costs.
As a result, “in the future, many people will appreciate the importance of saving more and spending money more carefully after the outbreak,” said Chen.
In 2019, consumption contributed to 57.8% of the nation’s economic growth. To make up for the sluggish sales in Q1 2020, local governments have distributed coupons to encourage citizens to spend in April, KrAsia reported.
However, it seems that people only used the RMB 34.9 billion (USD 4.94 billion) worth of free vouchers to buy necessities, as per Reuters.
Despite the lack of a resounding consumption uptick, China certainly is expecting a boost in spending as the country welcomes the longest national holiday since the Chinese New Year.
It is estimated that over 90 million people will travel domestically during the five-day Labor Day Holiday in early May, double the number of travelers in the early April Qingming Festival.
Online travel agencies include Trip.com and Mafengwo have launched tourism packages for pre-sale to try and revive the sputtering tourism and hospitality industry.
