Chart of the Day: China’s Consumers Tighten Their Belts
Household spending on goods and services in China fell marginally in 2022 in real terms as people tightened their purse strings amid sluggish economic growth and weak confidence.
Data released by the National Bureau of Statistics Tuesday show that nationwide per capita household consumption expenditure, based on a sample survey of more than 160,000 households, was 24,538 yuan ($3,622) in 2022. That’s a 1.8% increase in nominal terms, but after taking inflation into account, it was a 0.2% drop.
The decline contrasts with a 12.6% surge in real terms in 2021, when China’s economy was recovering from the initial shock of the Covid-19 pandemic in 2020. Per capita household consumption expenditure dropped 4% in 2020.
China’s economy recorded its two weakest annual growth rates since 1976 in 2020 and 2022 — 2.2% and 3% respectively — when strict Covid containment measures disrupted economic activity, curbing production and dampening demand.
As growth slowed, people reduced their spending, and household savings increased. The ratio of household savings to disposable income likely climbed 1 to 3 percentage points during the three years of the pandemic compared with 2019, Guo Lei, chief economist of GF Securities Co. Ltd., wrote in a report this week. Guo defined the amount of household savings as the difference between per capita disposable income and consumption spending.
The drop in per capita consumption expenditure in 2022 was mainly driven by urban residents, whose average spending was 30,391 yuan, a drop of 1.7% in real terms, while rural residents spent 16,632 yuan on average, an increase of 2.5% in real terms, according to NBS data.
A closer look at the data shows that in both 2020 and 2022, people cut back outlays on education, culture and entertainment the most in terms of percentage changes. Per capita spending in this category dropped 19.1% in nominal terms in 2020 and 5% in 2022 respectively. Expenditure on clothing also fell — by 7.5% in 2020 and 3.8% in 2022. The NBS did not give percentage changes in real terms.
Housing, and food, tobacco and alcohol, which together made up more than half of the total expenditure of surveyed households in 2022, increased 4.3% and 4.2% respectively in nominal terms.
Contact reporter Zhang Yukun (firstname.lastname@example.org) and editor Nerys Avery (email@example.com)
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