Two Sessions 2020: China’s shaken millennials look to state incentives to recharge auto industry spending

China’s auto industry seeks pick-me-up from delegates at the ‘Two Sessions’ amid early signs of rebound from pandemic

Incentives can fuel ‘revenge spending’ by millennials shaken by the worst economic crisis since the twilight of Mao era

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Workers labour at an assembly line for Dongfeng Passenger Vehicle Company in Wuhan, in central China's Hubei Province in March 2020. While many migrant workers across China remain trapped by travel bans due to the coronavirus, some industrial production has returned to action, including in the crucial auto manufacturing industry. Photo: Xinhua

Published: 7:30am, 22 May 2020Updated: 7:30am, 22 May 2020

By most observations, China’s automotive industry is on a slippery slope. Sales and production have declined for the past two straight years, while concerns about pay and job cuts have clouded the industry prospects.

“I’m asking myself whether I really need to own a car,” said Huang Can, a 25-year-old Shanghai resident and employee of a food processing plant, who was planning to buy a car before Covid-19 struck. “My salary has been reduced and the expected huge discounts by car companies did not happen.”

The coronavirus pandemic has taken its economic and human toll, crimping the housing and car industries, two of the big-ticket budgets in most people’s lifetimes. Last year, the two generated 24.3 trillion yuan in sales (US$3.4 trillion) combined, close to one-tenth of the New York Stock Exchange capitalisation.

Young and shaken millennials like Huang are, however, key to China’s revival efforts. Yet, its conservative stimulus package is only slowly feeding the “revenge spending” needed for a long fight to extricate the economy from its worst slump since 1976, the twilight year of the Mao Zedong era.

Huang’s dilemma will strike a chord with 3,000-odd political elites at the National People’s Congress, which meets on Friday. The delegates are tasked with turning the economy around, and calming nerves in the job market. No doubt, the nation’s carmakers will tune in too for the expected pick-me-up recovery pitch.