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China's economy shrank for the first time in decades the first quarter as the coronavirus paralysed the country. Photo: AFP

Coronavirus: Chinese consumer sentiment still reeling from pandemic, hitting hopes of ‘revenge shopping’

  • More than half of Chinese households plan to increase savings and cut back on spending following the Covid-19 pandemic, a new survey shows
  • Results show that consumer sentiment is still recovering from crisis and quash hopes of a quick rebound in the world’s second largest economy
A quick consumer rebound in China, or what some describe as “revenge shopping,” is unlikely to happen in the second quarter as more people focus on saving over spending following the coronavirus outbreak, a new survey shows.

More than half of Chinese households planned to increase their savings and cut back on spending after the outbreak was contained, while 40 per cent would maintain normal shopping patterns and 9 per cent would buy more, according to the survey of 28,000 people by researchers from China’s Southwestern University of Finance and Economics.

The study, which was released last week but conducted between late February and early March, surveyed users of Alipay, a popular mobile payment application developed by e-commerce company Alibaba, which also owns the South China Morning Post.

The survey results, which suggest Chinese are reluctant to spend even as the pandemic is brought under control, chimes with financial data published by the People’s Bank of China earlier this month.

In the first quarter, household savings rose 6.47 trillion yuan (US$913.4 billion), up 6.6 per cent from a year earlier and roughly equivalent to 70 billion yuan flowing into savings accounts every day during the period.

Hopes that Chinese would quickly resume their usual shopping habits after the coronavirus was brought under control were pinned largely on economic data released after the 2002-2003 severe acute respiratory syndrome (Sars) outbreak.

Retail sales growth in 2003 fell from 7.7 per cent in April to 4.3 per cent in May, when the outbreak was at its worst, and bounced back to 8 per cent in June when the virus was contained.


However, the situation then differed noticeably in that there were no nationwide lockdowns following Sars, when the most stringent prevention measures were concentrated in the capital Beijing and the southeastern province of Guangdong, meaning there was less disruption to the economy.

The coronavirus has hit almost every corner of the Chinese economy and has delivered a hammer blow to some small businesses and individuals, particularly in low-income households that earn less than 50,000 yuan (US$7,100) annually.

Some 55 per cent of low-income families planned on saving more than they consumed, compared to 34 per cent of households earning more than 1 million yuan (US$141,000), the survey showed.

The salaries of poor families had dropped the most due to the outbreak compared to other income groups, with about a third of them saying their salaries fell significantly, compared to less than 10 per cent from households that had annual incomes of between 100,000 yuan and 300,000 yuan.


“Because of the epidemic, the job instability of low-income groups surged, which in turn reduces their incomes,” the report said. “Without massive consumption stimulus, there is unlikely to be revenge shopping.”

Chinese social media users have coined the phrase revenge shopping to refer to the possibility of post-lockdown spending sprees that some have hoped might create a quick rebound in the world’s second largest economy.

But weak consumer sentiment appears to be an obstacle to that, and will put more pressure on the government's efforts to revive economic growth after it weakened to its lowest pace in decades in the first quarter.

Some local governments have distributed shopping coupons worth tens of billions of yuan to boost consumption, although their effectiveness is unclear.

In the first quarter, per capita consumption expenditure went down 12.5 per cent in real terms from a year earlier to 5,082 yuan, according to the National Bureau of Statistics.


Urban residents spent 6,478 yuan, down 13.5 per cent from a year earlier, while rural residents spent 3,334 yuan, falling 10.7 per cent year-on-year.

This article appeared in the South China Morning Post print edition as: ‘Revenge shopping’ hopes dashed as Chinese save more