Mainland Chinese tighten purse strings amid gloomy times
Government faces huge challenge to encourage consumers to open their wallets as the household savings rate hits a record high of 38 per cent
A trip to the United States was on the top of this year's holiday plans for Zhang Jun and his wife, but after reviewing their budget, the two are now likely to shelve those plans.
Zhang, a 40-year-old legal counsel in a foreign energy company based in Beijing, said business was not going well at the moment, partly due to the gloomy economic situation.
"We're likely to cancel the trip. I feel it's necessary to save some money and get prepared for the worst," he said.
Apart from cutting the travel budget, Zhang has trimmed shopping bills and no longer visits the imported food supermarket in the basement of his office building where he used to shop every fortnight.
"Now I go to ordinary supermarkets instead, which are much cheaper," he said.
Like Zhang, many mainland consumers have become more cautious about their spending as they feel the chill of the economic slowdown. Their response may cut the contribution of household spending to economic growth and see the country's already high household savings rate rise further this year.
"Chinese consumers are holding on to their wallets a bit tighter than before," said Jeff Walters, a partner of Boston Consulting Group. "This is driven in large part by China's waning [gross domestic product]. Recent rises in housing prices and uncertainty over the property market are also making people more hesitant about spending."