adminChina’s once free-spending consumers are holding back, hitting luxury brands particularly hard.
But this doesn’t mean people in China don’t have money. They just now prefer saving it.
According to official data from the People’s Bank of China, household deposits rose to a record — around 147 trillion Chinese yuan, or US$20,2 trillion — at the end of June.
In the first half of this year, Chinese households added 9,3 trillion yuan to their deposit accounts.
But the extra money isn’t translating into spending, dragging second-quarter growth to 4,7 percent from a year ago — below analysts’ expectations. Retail sales growth also lagged, increasing just 2 percent in June from a year ago, the slowest in a year and a half.
Data suggests Chinese consumers would rather pay down their loans and move their deposits to wealth management products, said Tommy Xie, head of Greater China research at OCBC Bank, in a Monday note.
In June, household deposits rose 2,14 trillion yuan from May. This increase was about 20 percent lower than the same period a year ago.
Beijing has been trying to boost economic growth by driving domestic consumption through subsidies and trade-in deals, even for property purchases.
Total yuan deposits — including household, corporate, and government deposits — totalled about 300 trillion yuan in June — more than double its GDP of 126 trillion yuan. Due to the lack of a strong social safety net in China, people in the country have an entrenched belief that they must save as a precaution, according to a Tuesday report from US investment bank TD Cowen.
Nearly half of 2 000 Chinese consumers in a recent TD Cowen survey said their savings were higher and that they are now saving more than a year ago.
Despite a lack of appetite for luxury fashion, China’s consumers have been snapping up gold — a haven asset — this year, sending prices of the precious metal to record highs.
– Reuters
Online Reporter