China’s frustrated middle class change spending, investing attitudes, but are they ‘lying flat’?
- China’s middle class are used to buying luxury items, making investments and buying property, but lots of these plans have been put on hold
- Banks have restricted precious metal trading for the likes of gold, while the housing market and stock market are no longer seen as offering security
China’s frustrated middle class are feeling the pinch. They are cutting back on luxury items, but rather than investing the wealth they now have at their disposal, they are instead hanging on to it amid feelings of insecurity. They are seeing their assets and income shrink and feel the toolbox as their disposal for ensuring wealth security is getting smaller.
Their frustrations are not helped as they feel that policy changes that could address market and consumer problems caused by coronavirus disruptions, tensions with the West and the politicalisation of economic matters are not forthcoming.
This has led to a downgrade in spending habits and putting investment plans on hold has become, for some, the most feasible financial and practical management tool in their arsenal.
Now that houses and monthly household income are starting to decrease, investing abroad or even buying gold [exchange-traded funds] is no longer practical for ordinary middle-class people
“I have heard from some friends that they have been preparing a contingency plan for the past two years, like keeping a certain amount of either paper gold, gold bars, US dollars in cash or in banks,” said Lin Xiaoxia, a Shanghai-based operations director.
Paper gold is an investment instrument for investors who are interested in buying and selling the metal under a preset contractual term without involving any physical delivery of the metal itself.