Unemployment and the fear of it are keeping mainlanders from spending and have pushed bank savings to record levels.
In the first eight months, individual bank savings rose to 5.09 trillion yuan (about HK$4.73 trillion), an increase of 16.8 per cent over the same period last year, while consumer retail sales rose only 7.3 per cent in the period to 1.85 trillion yuan, and the retail price index fell 2.4 per cent.
Manufacturers and shops are offering price cuts, giveaways, improved after-sales services and a cornucopia of choice.
In an analysis of this weak demand, the Economic Daily yesterday said the main reasons were the changing job market and the astonishing discrepancy in incomes.
Tens of thousands of people have lost their jobs in state companies, cutting their spending power, while the colleagues they leave behind do not know how long they will be employed, making them reluctant to spend. The same is happening in the government, which is shedding thousands of jobs.
Urban workers laid off from state companies are supposed to receive a basic living allowance of 100 to 200 yuan a month for up to two years, according to where they live. In many cities, they receive nothing and are forced to rely on their savings or the charity of their family and friends.