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China’s economic plan has hit a wall, and now the government wants households to carry the weight. For years, Beijing leaned on exports and state-led investment to fuel growth. But with that model losing steam, President Xi Jinping is looking inward — at a population that’s hesitant to spend and quick to save. And while the call to increase consumer demand has grown louder, nobody’s really sure if Xi can make that happen. According to the Financial Times, there are questions about whether Beijing’s top-down approach can unlock the massive spending power that’s been sitting idle for years. The size of China’s consumer market is massive — the second largest globally after the U.S. — but that doesn’t mean people are buying enough. Right now, consumer spending makes up only 40% of the country’s economy, far below the 60% seen in other countries.  Before the pandemic, it was growing at a 9% annual pace. Still, confidence hasn’t returned. People are anxious. A collapsed housing sector and the scars from the zero-Covid strategy have pushed families to save more and spend less. Big economy, small confidence Retail sales inside China are ten times bigger than exports to the U.S., but that hasn’t translated into strong domestic demand. Rory Green, chief China economist at TS Lombard, said, “China is the largest market in terms of volume and value for almost any consumer product, ranging from vehicles and smartphones to luxury goods and cinema.” Even with economic pressure, younger Chinese aren’t shying away. Keyu Jin, an economist at Hong Kong University of Science and Technology, said Gen Z and millennials are still buying. “Gen Z and millennials are still eagerly spending on travel, outdoor experiences and gaming,” she explained. “The bulk of consumer credit goes to people under 35. With one click on…

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Filed under: News - @ May 25, 2025 2:15 pm