China’s rising instant noodle sales revive debate over if Chinese consumers are spending less

The sharp recovery of instant noodle sales in China has reinforced debate over a controversial economic topic: are consumers downgrading their consumption due to fears about the outlook?

The debate is important because the Chinese government is counting on consumer spending to help support the economy amid the trade war with the United States. If consumers hold back on their spending, it could mean growth may slow faster than expected.

Consumption of instant noodles in mainland China and Hong Kong started falling after 2014, partly because cheap takeaway meals were being heavily subsidised by food delivery start-ups. Instant noodle sales slipped to 38.5 billion servings in 2016, but rose back to more than 40 billion servings last year – or more than 38.8 per cent of total global sales, according to the World Instant Noodles Association. Analysts expect sales to rise further this year.

Instant noodles are an iconic consumer product associated with China’s rapid industrialisation over the last 40 years. Sales rose sharply in tandem with the rise in industrial workers and declined with the rise of the Chinese middle class, who used their bigger incomes to buy higher-end food products.

Because of their popularity and importance, instant noodle and car sales are often compared to gauge whether Chinese consumers are upgrading their spending – buying more expensive items – or downgrading their consumption by buying cheaper alternatives and saving more.