Chinese consumers are more thrifty than before Trump’s trade war
The skittishness of consumers bodes ill for an economy that needs stronger spending to reverse a slowdown
[BEIJING] More Chinese households want to increase saving and reduce spending than before the latest trade war with the US, based on a survey by the central bank.
While optimism regarding employment grew slightly in the fourth quarter and expectations about prices stabilised, people became more negative over incomes, the poll showed.
An indicator of overall loan demand improved for a second quarter but remained far below its level in late 2024, based on a separate survey of banks.
The skittishness of consumers bodes ill for an economy that needs stronger spending by households and businesses to reverse a slowdown, in the absence of more aggressive stimulus by the government.
Expanding domestic demand has been made the government’s top economic priority for this year.
The malaise contrasts with the resilience of manufacturers and tech companies in the face of tariffs imposed by US President Donald Trump, resulting in a two-speed growth rate that will likely persist in the months ahead.
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Retail sales growth has slowed every month since June, as funding ran dry for the government’s programme to help consumers trade in old goods for new ones.
As part of an effort to coax people to spend more, the authorities said at the end of December that they were providing 62.5 billion yuan (S$11.4 billion) in initial funding for the drive this year, releasing the subsidies before the annual Budget is reviewed by national legislators in March.
The People’s Bank of China (PBOC) surveys also found that households are increasingly willing to spend on services – a part of the consumer economy that has been in focus for officials.
Education, healthcare and travel were the top three choices of respondents who planned to increase their spending in the next three months, the poll showed.
The proportion of people planning on spending more on social and entertainment activities is at an eight-year high, said BNP Paribas.
The PBOC surveyed 20,000 bank depositors in 50 cities across the country, about 3,200 banks and more than 5,000 companies. BLOOMBERG
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