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Apple Warning: Seven Charts That Show the Pressure on China’s Consumers
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.
Tom Orlik on wealth distribution in China and why increasing consumer spending would require higher incomes for the lower middle class and rural households
01/07/2010
Orlik cites a study by a Chinese university which shows 10% of the households has over 80% of the wealth, and over 50% of the households have little or no savings. This suggests that there is not much room to increase consumer spending on education, healthcare, and consumer goods for these households as incomes are too low. This may account for the insecurity felt by a large majority of households about the future. It also shows that rebalancing the global economy would require rebalancing within China, reducing inequality and improving incomes for the middle class to increase consumer spending.
Grouped Articles
Wall Street Journal 07/01/2013
The Slowing of Two Economic Giants
New York Times 07/14/2013
Wall Street Journal 07/15/2013
New York Times 12/18/2011
Survey in China Shows a Wide Gap in Income
New York Times 07/19/2013
Wall Street Journal 11/06/2013
China's economy in 2018 following the trade war with the U.S.
06/25/2018
Grouped Articles
China Moves to Shore Up Economy as Slowdown and Trade Fight Loom
06/24/2018
China frees up more money as trade war takes shape | DW | 25.06.2018
DW.COM 06/25/2018
China cranks up the propaganda machine for trade war with US
The Times 07/05/2018
U.S., China Dig In for Long Trade Fight as Tariffs Take Effect
WSJ 07/06/2018
Is China losing the trade war against America?
The Economist 08/10/2018
China Puts Positive Spin on U.S. Trade Truce for Its Domestic Audience
WSJ 12/03/2018
The extraordinary shift in wealth controlled by 10% of the households in China from 31% in 1995 to 86% in 2011, which makes a shift to consumer spending and rebalancing the world economy less likely
10/03/2012
By comparison estimates show 10% of the households in the U.S. control 74% of the wealth. Most of the shift in wealth happened in the last 10 years 2002-2011, as by 2002 41% of the wealth in China was controlled by 10% of households. About 55% of China's households had little or no savings for the year, in this 2011 survey cited by NYT's Orlik, which means a shift to consumer spending for the Chinese economy is less probable in the short run.
Grouped Articles
Wall Street Journal 10/03/2012
Chinese debt: The great hole of China
Economist 10/17/2014
Adidos and Hotwind? In China, Brands Evoke Foreign Names, Even if They’re Gibberish
New York Times 12/26/2014
Apple Warning: Seven Charts That Show the Pressure on China’s Consumers
WSJ 01/03/2019
Chinese Consumers Curb Spending, Likely Deepening Slowdown
WSJ 01/03/2019
China's slowing economy in 2019 with sharply lower consumer spending
01/03/2019
Grouped Articles
Apple Warning: Seven Charts That Show the Pressure on China’s Consumers
WSJ 01/03/2019
Chinese Consumers Curb Spending, Likely Deepening Slowdown
WSJ 01/03/2019
Corporate China Faces Wave of Losses
WSJ 02/01/2019
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