Coronavirus: China’s economy unlikely to be saved by ‘revenge spending’ as worried consumers emerge from lockdowns

Chinese social media users have coined the phrase as China emerges from almost two months of lockdowns aimed at halting the spread of the virus

Consumption contributed around 60 per cent of growth last year, but worries over an economic downturn, job prospects and high debt levels are set to limit spending

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A survey conducted by China’s Southwestern University of Finance and Economics last month found that 60.9 per cent of 3,143 households said their income in 2020 would shrink this year compared with last year. Photo: Bloomberg

Published: 8:30pm, 15 Apr 2020Updated: 10:21pm, 15 Apr 2020

The idea that consumers in China will engage in lavish, pent-up “revenge spending” following the end of domestic coronavirus lockdowns to create a quick rebound in the world’s second largest economy is unlikely to be realised by its middle-class.

Chinese social media users have coined the phrase as China emerges from almost two months of lockdowns aimed at halting the spread of the virus.

But with the result also pushing China towards its first economic contraction since 1976, the year former leader Mao Zedong died, urban middle class consumers are instead tightening their belts amid growing fears of an economic downturn, darkening job prospects and high debt levels.

For China’s middle class, some 400 million people by Beijing’s own estimate, the coronavirus outbreak has shaken the very notion that life would always get better and that future incomes would always be enough to cover rising debts. But the shared optimism of those who have benefited from China’s economic boom over the last several decades is fizzling away.

Jane Zeng exemplifies someone who has, up to now, reaped the rewards. She and her husband, a fund manger, are both in their early 40s and own three flats in Shenzhen, the booming hi-tech capital of China that borders Hong Kong.