Middle Class Not Opening Wallets, Threatening China's Economy... "Lost 'Cherry Freedom'"

56.1% Income Decrease During Pandemic
Economic Activity Disrupted by 'Zero COVID' Policy... Leading to Consumption Slowdown

On the 1st, after a two-month-long COVID lockdown was lifted, citizens were walking on Nanjing East Road, Shanghai's largest downtown area.
[Image source=Yonhap News]

[Asia Economy Reporter Yoon Seul-gi] A report has emerged that the slowdown in consumption among the middle class, which numbers around 400 million people, is acting as a major risk to China's economy. While the United States is experiencing its worst inflation in 40 years, China appears reluctant to open its wallets despite government stimulus policies. Analysts suggest that Chinese consumers have lost confidence in spending since the COVID-19 pandemic.

Hong Kong's South China Morning Post (SCMP) reported on the 10th that China's middle class, numbering about 400 million, has suffered wage reductions due to disruptions in economic activities caused by the 'Zero COVID' policy, leading to decreased consumption and a gloomy economic outlook.

Unlike the West, including the U.S., where controlling inflation is difficult, China has been experiencing 'consumption contraction' due to wage reductions following the COVID-19 pandemic. In fact, China's consumer prices rose by only about 2% compared to last year.

Gong Yuantao, a real estate market investor in Shenzhen, told the media that while global inflation could affect China, "ordinary people believe that the Chinese government has the ability to stabilize basic prices, so high inflation like in the West will not occur in China."

He added, "With increasing news of layoffs, housing prices, rents, and incomes in China are generally stagnant. All we can do is continue to spend less regardless of what kind of incentives are introduced. This feels like a truly frightening pre-panic."

A citizen is making a payment at a Carrefour store in Shanghai, China. [Image source=Yonhap News]

According to a recent survey on China's social networking service Weibo, 56.1% of 3,359 respondents reported a decrease in income during the pandemic, and 24.6% said their income remained frozen.

SCMP analyzed that "while there is expected to be little change in pork prices and rents, many urban middle-class people have lost what is called 'cherry freedom'." 'Cherry freedom' refers to the economic ability of China's middle class to purchase expensive imported fruits without hesitation.

Wendy Liu, an executive at a foreign company in Shenzhen, said, "Since 2020, most of my friends have had stagnant or reduced incomes. I still have some leeway, but I feel a lot of pressure to maintain the same quality of life as last year."

Meanwhile, as the spread of COVID-19 in China subsides and strict lockdown measures are gradually eased, consumers remain reluctant to open their wallets. The Chinese government is implementing policies to stimulate consumption, such as providing discount vouchers or distributing digital yuan, but these measures have yet to yield direct effects.

This content was produced with the assistance of AI translation services.