Chinese State Media: "Spring Festival Holiday, First Opportunity for Economic Recovery... Revenge Spending Expected"

Lianping "Bigger Rebound Than Last Year" Forecast
Beijing University Professor "Adaptation Period Is 2 Weeks... Will Soon Become Bolder"

[Image source=EPA Yonhap News]

[Asia Economy Beijing=Special Correspondent Kim Hyunjung] Amid a significant contraction in consumption in China following the transition to With-Corona, local experts predict that suppressed demand will explode around the Lunar New Year (Chunje, 春節) holiday in January next year, presenting an opportunity for economic recovery. Currently, people are extremely refraining from going out due to concerns about COVID-19 infections, but it is expected that they will soon adapt to the new social atmosphere and system.

According to the state-run Global Times (GT) on the 15th, Liao Qun, chief researcher at the Chongyang Financial Research Institute of Renmin University of China, said in an interview with the media, "After the Lunar New Year, people will shift from caution to boldness, and in 2023, full-scale revenge consumption will return." Researcher Liao predicted, "Depending on government support policies and public consumption habits, a stronger rebound than what was experienced between 2020 and 2021 will appear." Last year, China’s GDP growth rate surged to 8.1%, offsetting the sluggish 2.2% growth in 2020.

China’s economic indicators for last month plummeted due to the spread of COVID-19 and the final high-intensity lockdown measures by health authorities. According to the National Bureau of Statistics announcement the day before, retail sales in China in November decreased by 5.9% year-on-year, significantly below the previous month’s -0.5% and expert forecasts of -3.7%. Industrial production increased by only 2.2%, falling short of the expected 3.6% and the previous month’s 5.0%. Since the authorities announced the easing of quarantine measures on the 7th, China has effectively transitioned to a With-Corona system, but as confirmed cases surged, people have continued self-isolation by staying at home.

[Image source=EPA Yonhap News]

In this regard, Li Anping, chairman of the China Chief Economist Forum, recently observed through the state-run media Global Times that the phenomenon of empty streets, restaurants, and shopping malls is temporary. Chairman Li explained, "Avoiding going out unless absolutely necessary is the result of a rapid strengthening of the public’s self-protection awareness," adding, "People will take a wait-and-see attitude for a while but will soon become accustomed to the new situation." However, he also predicted that "consumption activities will be hit in the short term, but demand will not disappear, only be postponed," and that related indicators will remain sluggish in December, which has many holidays and continued COVID-19 spread.

Professor Chao Heping of Peking University’s Economics Department estimated that the Chinese people’s 'adaptation period' to the new quarantine system is about two weeks. Professor Chao said, "People’s emotions and attitudes toward the situation can change significantly within two weeks, and new feelings often negate the previous ones," forecasting, "At first, people will be cautious about venturing into a different system, but soon they will become familiar with the new norms and become bold."

Meanwhile, the Chinese government is focusing on supplying personal protective equipment such as antigen test kits, vaccines, and masks, which are in short supply, while announcing policies to expand domestic demand. During the Lunar New Year periods last year and this year, regional 'recommendations to refrain from travel' were issued, but this year, it is expected that consumption recovery and economic revitalization through travel will be pursued. The Times cited a recent announcement by international data analytics firm Nielsen, reporting, "Although slow, the Chinese consumer goods market is already showing signs of recovery," and "More than half of the surveyed entrepreneurs maintained a positive outlook on China’s economy and trade next year compared to this year."

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