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Young people in China express their anxiety about the economic situation in China on social media sites Weibo and WeChat. People compare the situation today in China with the situation in Japan after 1987. Young people worry about job security, some car-pool to save on gas, and others reduce expenses to increase savings. Lin Mo runs a financial column offering advice to readers on WeChat online site. In 2015 7.5 million new graduates will come out of Chinese universities, up 3% from 2014. There is a great deal of anxiety for these graduates as new job opportunities will be fewer for those not well connected or having skills in high demand.

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Three BBC correspondents on China's 2026 National People's Congress - effort to invest in childcare and elder care services to increase consumer spending. To continue in solar, robotics, AI, EV's, and exports as before. The problems of industrial overcapacity and pushing subsidized product into the US or EU that cause trade tensions and tariffs will continue.  New 301 investigations by US Trade Representative are taking place and will complete by mid-July. Germany's chancellor was in Beijing making a similar point about industrial overcapacity and German business is now facing the same threats to their business that the US has gone through. The one other way for China to grow is to increase consumer spending- hence the effort to help young people with childcare costs and retired people with elder care. The payments to seniors is low says the BBC's McDonnell who says the increase in payment to rural and non-working urban residents of $3 per month is miniscule. No details given for housing support to newly married couples. On one aspect relevant to the Iran war-China is increasing its efforts on renewable energy to reduce imports from volatile Middle East. ...

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Retail sales in China dropped sharply. Retail sales dropped from double digit increases for most of 2014-2017 to single digits in 2018- sales dropping to 8.1%. Government restrictions to prevent a housing bubble restrained housing sales, and policies to control corporate debt limited growth. Higher inflation for food and housing, have led to asharp pullback in growth of consumer spending.  Trade tensions with the U.S. have hurt consumer sentiment. The feeling that China's growth would stabilize because of its connections to the world economy is fading as consumers see persistent trade tensions with the U.S. including tariffs of upto 60% in tit for tat actions as hurting China's prospects.  The GDP growth is expected to be about 6.5% for 2018 according to government estimates, which experts say is actually much less or even half that as exporters retrench in the face of slack demand in China and lower sales to the U.S.  Rail and other infrastructure projects that were considered unsuitable are now being given approval in efforts to boost the economy. More tax cuts and expanded deficit spending are policies likely to be followed.  At foreign companies no overtime, and job cuts are commonplace especially in the auto industry. ...

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China’s 15th Five-Year Plan recommendations set out China’s energy and climate priorities - from the Sino-German Cooperation on Climate Change. It says in its Conclusion as it relates to China's Energy Initiative working with German cooperation. It shows China is committed to cutting its reliance on fossil fuels from the Middle East particularly now with the situation in the Iran War and cutoff of such supplies. It is a broad comprehensive approach to industry, business and society's needs and how to best make the transition to low carbon emissions and renewable energy similar to what Germany is accomplishing on its own. "In essence, the recommendations for the 15th Five-Year Plan point to three main priorities: further expanding renewable energy and modernising the power system to reduce reliance on fossil fuels; shifting policy focus from controlling energy use to directly controlling carbon emissions, including plans to peak coal and oil consumption and expand carbon markets; and integrating climate and low-carbon goals across industry, finance and consumer policies, making green development a central pillar of China’s long-term economic strategy." ...

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Credit card balances of Brazilians increased by 29% in 2009, of Chinese by 17%, according to the Lafferty Group.

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Sternberg points out that China's banking system lacks the experience in consumer credit and consumer finance products that would provide the impetus to a surge in consumer spending in China for imported products from the US or Europe. Outstanding consumer credit in China is only 13% of GDP, according to a 2009 study by McKinsey and Company, compared to 48% in Malaysia and 70% in S. Korea. China has lost a decade or more he says in allowing foreign banks to develop a consumer-finance market, and Chinese banks have little compettitive pressure to serve lower income consumer borowers. The Dutch PPF Group was allowed into this field for the first time in November 2010 to introduce in-store financing for durable goods purchases, something available to consumers in Brazil and other developing countries for many years. Large banks have an entrenched mindset to lend to businesses, and especially to state owned enterprises which have the collateral and government guarantees and support to obtain this lending. Risk averse banks in a financial system that lacks the kind of credit ratings system for consumers that the US and Europe have, prefer to lend to make loans to state owned enterprises where the government guarantees the loans. Interest rates on deposits are low and the government deliberately allows a wide spread for the banks so that they can ensure enough earnings to pay for non-performung bad loans, both from the last decade and from the binge in stimulus lending in 2009-2010. This reduces consumption by reducing the earnings on savings for consumers and households. These problems can only be solved gradually if the government and leadership want to change course, but this oddly enough is not happening. Other problems are that China's export factories are part of a global supply chain in which other countries do the product development, logistics, marketing, and retailing. Chinese firms lack the experience in these areas to shift to domestic consumers. As a result, says Sternberg, to lose a foreign customer can mean going out of business. Without government leadership and new direction through large scale re-allocation of capital and labor to the small scale businesses that serve consumers in the domestic market, all the talk of rebalancing will be just that, talk only and no real rebalancing....

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A big hurdle for local brands in China is the Chinese consumer's interest and respect for foreign brands. Asked about local brands buyers say they can't think of any, or say Chinese brands are shoddy in quality and value. Brands such as Haier in consumer appliances and Lenovo in tech are an exception. During the big surge in consumer sales in the last two decades Chinese companies producing local brands thought it adequate to simply imitate foreign brand names rather than take the difficult route of establishing the credibility of their own brand- an effort which might take years. Often the foreign name was changed slightly to keep the resemblance but mean something positive to Chinese consumers in the local language. Common are names such as Adidos, Hike, Cnoverse and Fuma for sneakers. Clio Coste keeps the connection to Lacoste with its crocodile logo. Coca Cola in Chinese is Kekoulele, translated to mean Tasty Fun. Only now are local companies giving serious attention to creating long term brand entity and image. The serious attention to brand names and branding comes at a time when China increasingly depends on consumer sales to power the economy with the decline in real estate and slower manufacturing. For the 11 months of 2014 retail sales were up 12 percent over the prior year period to $3.8 trillion, according to the National Bureau of Statistics. ...

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China's retail sales were up 10% in March. The economy expanded 4.5% the first quarter of 2023 over the prior year and is dependent on consumers spending in the domestic economy. Over the prior quarter growth was 2.2%. Investment in buildings, fixed assets and machinery declined by 0.2% over the prior month, in real estate over the prior quarter it declined by 5.8%. The recovery is a rebound from three years of weak consumer spending during the pandemic as Chinese people went out- traveled and went out shopping. 

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As China's food retail stores landscape has changed with more and better options offered to consumers, they have shifted upscale, especially with the rapid growth of incomes in China in the last decade. With a decline in growth for Yum Brands in China the company has decided to spin off its operations in China into a separate company, in the hope of giving the local company more room to respond to competitive changes in the food retail store business. As Chinese consumers urban disposable income showed rapid growth from 7700 yuan in 2002 to 23,700 in 2015, the market for food retail chains has changed. With this growth came other competitors such as Pizza Express, a UK chain at the higher end with local Chinese partners, and at the lower end Taiwanese competitors Ting Hsin International Group with its Discos fried chicken chain competing with KFC Yum Brands stores. Local Chinese competitors also moved upscale with Xiabuxiabu Catering serving hot pot, for consumers to cook meat and vegetable in broth doing it themselves. Other factors hurt Yum Brands growth and brand respect with the media reporting use of growth hormones and antibiotics by Kentucy fried chicken suppliers in 2012. And a local media report in 2014 saying that a KFC supplier supplied expired meat hurt sales with adecline of 14% in the fiscal 3rd quarter 2015. The opinion for Pizza Hut, a Yum brand has changed from as recently as 2012, with one survey showing a drop from 39% to 25% for consumers who see it as a desirable brand. A Beijing teacher for example now sees Pizza Hut as a cheap option compared to spending 128 yuan or $20 on a better quality pancetta and sun dried tomato pizza. More discriminating Chinese consumers means this trend will continue, and the media constantly looking for flaws in quality standards. As many companies are finding out the Chinese market is not going to be easy for the complacent....

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McDonald's is seeing declining sales in the U.S. The percentage of people in the U.S. going to McDonald's declined by 12.9% in the 19-21 age group and was flat for the 22-37 years age group, according to Technomic. Younger Americans especially are seeking out healthier alternatives with emphasis on fresh food. Another competing trend is fast casual restuarants such as Panera Bread. Fast casual restaurants increased from 9000 to 21000 in the last 10 years, while McDonalds has remained at 14,000. Chipotle started in 1993 and now has 1600 locations. Five Guys has 1000 locations. Consumer Reports surveyed 32,000 subscribers and rated McDonalds as the last in taste of 20 burger chains. Consumer Reports gave as a reason millenials and younger consumers who will try hard to get the right food. Problems in Russia about sanitary conditions and declining sales in China after the government accusations about a key supplier using expired meat also add to problems. Increasing concern about healthcare and obesity also add to the search for alternatives and careful selection of meals, especially among younger educated buyers....

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Sharply lower consumer spending is hurting Apple sales in China. Apple cut sales and issued a sales warning in January 2019. This follows Apple's sharp slowdown in India with its uncompetitive pricing.

Retail sales growth in China- which bounced back in previous downturns- dropped to the lowest level in 15 years in November 2018. Auto sales are down with the sharpest drop in 7 years- the first annual drop in sales since 1990. Fears of a housing bubble have led to restrictions on home purchases for speculation which have not been lifted. Income tax reduction has not increased spending. GDP growth for the fourth quarter dropped to 6.4%.

Further signs of a sharp pullback are seen in the drop in consumption tax revenue falling by 61% in October and 71% in November 2018. The consumption tax is placed on cars, gasoline and luxury goods, and is paid by the companies making the products.

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Since 2004 consumer spending's share of the economy in China has fallen from 40% to 35%.

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China's consumer prices declined by 0.3% in July. There are signs that the economy is slowing. A deflationary trend is taking shape with buyers declining to spend following layoffs at companies, higher unemployment and less growth. Expectations of falling prices could further sap demand worsening the debt situation in China. China's economy has grown in the last decade by assuming ever larger debt burden. The debt in 2022 was three times the GDP of China. Servicing this debt becomes harder when consumer demand is weak. The situation in the US is different with the central bank the US Fed increasing interest rates to lower inflation from 9% in 2022 to 3.2% in July, and expectations of a drop ion inflation with lower shelter costs in rest of 2023.

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"China's Superbank," by Henry Sanderson and Michael Forsythe looks at the rise of China Development Bank to provide insights into the two decade real estate boom in China, and the trillions of dollars in loans made by state owned banks to finance China's state owned industries and infrastructure development. The authors say these loans based on land owned by the state, improved with roads and other infrastructure and then sold to industry, have helped finance China's urbanization and industrial development. But it has also created problems including eviction of farmers from the land by local government authorites increasing inequality, led to misallocation of capital on bad projects, and an unsustainable model of development focussed on state owned companies. A major side effect of this is not covered in the book. This is the impact of crowding out of credit for private industry in China, with privately owned business having to pay higher rates in the underground loan market or lacking financing. A major focus of the report "China: 2030" by the World Bank and China's official think tank Development Research Center is on reversing this development to come up with a sustainable development model. The report was supported by World Bank chief Zoellick and China's new prime minister Li Keqiang. "The Great Rebalancing," by Pettis, a finance professor at Beijing University, looks at the other side of the financing of China's boom- the low interest rates on savings for China's consumer. This reduces household incomes and reduces purchasing power as the interest rates are lower than the rate of inflation. Lower value of China's currency also reduces the purchasing power for China's consumers. Estimates show the low interest rates cost China's workers and consumers somewhere in the range of 3 to 8% of GDP annually in bank deposit income. This money is funnelled through the banking system to make more loans for infrastructure and growth at the state owned companies, concentrating exraordinary level of financing in one direction. As a result the consumption share of GDP in China has actually fallen in the two decades of hyper development. This is about 34% compared to 50-55% for other Asian economies....

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China's consumer spending with its reopening won't match the pandemic end period US spending surge, says this report in WSJ.

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Instead of a jinx much to the contrary the US economy outlook for 2030 in Feb 2026- a surge in investment spending in 2026-2030, new manufacturing investments and lower energy costs, moderating inflation, are likely to propel the US economy ahead to 2030.The effect of tariffs as a policy making tool has been muted because of exemptions, reversal of tariff rates once key objectives were secure for tariffs as a way to get action on foreign policy as with Indian purchases of Russian oil, deals with Japan, South Korea and China, India, UK and the EU. Some sources such as the Philadelphia Fed see price rises reaching 3% in some inflation guages more than the moderate 2.5% in the consumer price index for January 2026. These sources see the hiring slowing down just as layoffs begin to happen in the latter part of the year which is a possibility but less likely. At this point in Feb 2026 there is a tendency not to layoff and to hang onto employees, and hiring has been slow in 2025. January's report of 130,000 jobs added is the first sign of strengthening of the jobs market. Overall a cautious view would be to call it a soft landing after the inflation surge of the covid period. Another way of looking at is is more in line with the strategic direction of the US economy- freeing up the economy with investments in energy,  reducing the key costs of production, tax policy of Bessent's complete one shot depreciation of equipment increasing business investment, tariff policy making the world trading system fairer and now more attuned to US interests, all creating an investment and jobs surge in 2026-2027. There is an added benefit from US efforts to free up the world trading system from the stranglehold placed on it by China with its control over world manufacturing. A dominance and unwise concentration gained from the serious mistakes of the Bush-Clinton period of not putting in safeguards for US factories and jobs (that form the backbone for families in neighborhoods towns and regions across the US), and US business interests growing indifference to the very communities they were based in by outshoring to China destroying whole regions in America. Even where it is criticized or seen as negative there are huge benefits when the US acted. Tariff increase on India is a clear example- it built Indian resilient attitude in June-Feb 2026, and during this period it cut funding Russia's war in Ukraine by sourcing energy from other sources, the US policy led to India and EU+ Germany signing trade agreements to double their effort and double trade and scientific cooperation ( a goal secured for the US as it reduces concentration in China), was followed by US signing its own trade agreement with India within days, and increases world trade of US and EU and Germany in ways that will bring 2.5 billion people into a strong partnership that overshadows anything that happened in China in the Clinton-Bush-Obama years of failure. ...

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Consumer issues raised in CCTV's 315 broadcasts named after World Consumer Rights Day. There is new energy in CCTV reporters now that consumer rights are a priority under the new administration of Jinping-Li Keqiang. Companies that have come up for review include food companies McDonald's, Yum Brands, retailer Carrefour, Automobile company VW, and computer/smartphone company Apple. Foreign companies operating in China are now expected to follow the high standards they maintain in their home markets or come up for review.

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China's healthcare costs have increased in the last decade without effective cost control measures. With the decline in consumer spending in the last decade to where it is now only 35% of GDP, and ordinary Chinese setting aside a large portion of savings for costly drugs and healthcare, reducing healthcare costs is a high priority to rebalance the economy and increase consumer spending. By comparison in the U.S. it is 70%. Bussey points out the importance of this for the new leadership of Jinping-Keqiang in China. Xinhua, the Party offical news agency, expressed China's new policy, saying that "some believe China may see a nationwide price cut on medicines." Regulators have begun probes of Nestle and Danone for possible anticompetitive activity and the two companies dropped prices for baby formula.

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After the Apple sales warning following the slowing down of the Chinese economy, this report asks who will be next- Starbucks, Nike? Starbucks has 3600 stores in China. Nike sales in China were on the upswing till the sales slowdown in China. Experts say more sales warnings are expected as Chinese consumers cut back sharply. Chinese consumers are gloomy about prospects for the future considering the trade tensions with the U.S. and the effects on the Chinese economy of tariffs.

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VW AG China will recall cars with direct shift gearbox systems with quality issues, including acceleration problems. This follows a CCTV broadcast of consumer issues program 315 on World Consumer Rights Day. The 315 program has taken up quality issues of foreign brands in China, including Carrefours, McDonalds, Yum Brands, and Apple. The program shows the shift in China supported by the new government for greater attention to consumer issues. It acts as a signal to foreign manufacturers in China to provide the same quality and attention to detail in the Chinese market that is provided in their home markets. For companies such as VW that depend on the Chinese market for growth, and generally for German, Japanese and U.S. manufacturers that depend on export growth, this will be the new standard for the Chinese market. Companies are at greater risk of quality problems during periods of rapid expansion, such as that being experienced by VW as it ramps up to become the leading global automobile manufacturer. This is similiar to the situation Toyota faced in 2009 leading to recall problems in the U.S. and negative publicity....

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Tariff revenues from import duties on imports from China on apparel, electronics, tools, consumer goods added up to $7 billion in September 2019. A 15% duty on consumer goods was effective September 1, 2019, with $111 billion of this item imported in 2018. 

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China's Producer prices declined by 3%, Consumer prices flatlined, and imports and exports are both down 6.2% in September 2023. Growth is expected not to exceed 5% in forecasts by IMF and others.

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China is moving to shift its economy in a new direction of self-reliance on domestic consumers and local investors. Mr. Xi calls it "domestic circulation." This also means less dependence on imported technologies and inward looking policies. As the pandemic has reduced demand in other countries and as the U.S. and West tighten controls on imports and introduce new restrictions, there is the sense that the entire policy has to shift quickly to dependence on domestic consumers and investors.

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China's economy expanded at 0.4% growth rate in the second quarter of 2020, according to the Bureau of National Statistics. It is not just the lockdowns that are dampening consumer sentiment.  US and EUropean demand for manufactured goods from Taiwan, South Korea and China is shrinking.

Youth unemployment is high with 20% of people 16 to 24 years without work. Some experts say the youth unemployment is increasing because companies are showing less interest in hiring and training new workers, or in investing in the future.