May 12, 2021

China’s First-Quarter Growth Is Expected to Boom on Paper

Families continue to save at a higher rate than they did before the pandemic, something that worries economists like Louis Kuijs, who is head of Asian economics at Oxford Economics. Mr. Kuijs is looking at household savings as an indication of whether Chinese consumers are ready to start splurging after months of being stuck at home.

Data on Friday showed that households saved more money in the first quarter of the year than in recent quarters. “Looking ahead, a convincing vaccination drive and continued improvement of labor market conditions are needed to unleash consumer spending and bring down that saving rate,” Mr. Kuijs said.

Many families took on more debt last year to buy property and cover expenses during the pandemic. China still largely lacks the kind of social safety net that many wealthy countries provide, and some families have to dip into savings for health care and other big costs.

Unlike much of the developed world, China doesn’t subsidize its consumers. Instead of handing out checks to jump-start the economy last year, China ordered state-owned banks to lend to businesses and offered tax rebates.

Travel restrictions over the Lunar New Year holiday dampened consumer appetite and slowed the momentum of Chinese shoppers. But retail data on Friday showed that March sales were better than expected, raising hopes that consumers like Li Jinqiu, 25, might begin to feel more confident in the coming months.

For now, Mr. Li, who is recently married and has a baby at home, is still choosing to save instead of spend. He had planned to work for the family business, but it has been hit by the pandemic and he doesn’t think there is much opportunity for him if he stays.

“The whole family has some sense of crisis,” Mr. Li said. “Because of the pandemic and because of family business, I have a sense of crisis.”

Article source: https://www.nytimes.com/2021/04/15/business/economy/china-economy.html

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