Economy Sep 14

China seeks a new army of consumers

But official statistics that appear at odds with reality have confused citizens and raised suspicion that party officials may have reverted to their old habit of fudging the figures

China seeks a new army of consumers
Farmers load rice seedlings onto a vehicle at a field in Jinhua in Zhejiang province in this file photo from June 2019. People are questioning national economic statistics that appear at odds with reality. Photo: REUTERS/Stringer.

(ATF) With the disasters of coronavirus, climate change, the world's economic slowdown, trade wars, human rights issues, Communist Party infighting, and dramatic pivoting from external to internal markets, ‘Socialism with Chinese characteristics’ is taking on another hue.

Under the leadership of Deng Xiaoping and subsequent presidents Jiang Zemin and Hu Jintao, China followed a path of state-led authoritarian capitalism. But all the pressures mentioned above, which have come to a peak in 2020, look to be pushing current President Xi Jinping’s rule towards are more leftist, populist policy style.

Despite all the economic pressure, China’s National Bureau of Statistics announced that the sales price of commercial residential buildings in top-tier cities rose slightly in August. Previously, all property belonged to the state, but in recent decades ownership of private property has been allowed, and Chinese people have stretched themselves to invest in property.

In recent months the Chinese leadership has stressed repeatedly that property is for living in, not speculation. Party leaders have also announced plans for a new approach – to build a "smart", cheap, pre-fabricated homes across the country, financed by bond investments and state capital.

At the same time, it has emerged through overseas Chinese media that large residential properties, especially those rented out or used for other purposes, are being seized back by the state. They revealed that ancient courtyard homes reportedly worth over $200 million, were seized by the government in Pingyao County in Shanxi province.

Caixin, one of China’s leading financial news-sites, reported that “the Pingyao County officials unilaterally 'recovered' private real estate that had been returned to the homeowners, moves which were untenable in terms of policy and law. More seriously, it sends a dangerous signal that local governments deviate from the principle of rule of law and selectively apply historical policies according to their own needs, in order to infringe on private property rights and evade the jurisdiction of the law.”

Despite this worry, CB Richard Ellis recently released a Greater China 2030 Outlook Report, which shows that with the gradual increase in the proportion of the service industry and per capita GDP of the economy, the Chinese mainland will become the largest market for investable commercial real estate in the Asia-Pacific by 2030.

And, the concept of sustainable development is expected to lead the real estate industry into a "green" and "zero carbon" era.

Recently, Premier Li Keqiang presided over an executive meeting of the State Council to determine measures to support the accelerated development of new business models and models to drive new consumption and promote economic recovery. The meeting noted that consumption is an important engine of economic development.

Negative impacts 'had to escape'

This year, consumption has been greatly affected by the coronavirus epidemic. New business models and models based on digital technology networks have supported rapid development of new types of consumption and have huge potential to spur more domestic demand, and strengthen economic recovery.

The officials said that “after the epidemic” there had been a negative impact on all of the market… which “is difficult to escape…”.

The epidemic has reshaped the consumer model. Jintai Information reported retail sales of consumer goods in the first seven months of this year dropped by 9.9% year-on-year. New growth has mostly been in online sales. “The internet celebrity economy and the live broadcast economy have injected new vitality into China's digital economy,” Jintai reported.

But last week China’s Cyberspace authority started cracking down on the country’s live streaming services, which officials described as "vulgar".

As China looks to create new economic models and develop internal consumer markets, this kind of bipolar behaviour from different government bodies will not help this search for the new Chinese super consumer.

Reflecting this today (September 14), it was revealed that the monthly income of 600 million people in China is less than 1,000 yuan.

Official statistics from 2018 showed that 60% of the working population in China had a monthly salary of less than 3,000 yuan ($440). And the latest data, for 2019, put the per capita annual salary at 37,800 yuan, and the average monthly salary put at 3,150 yuan ($462). Meanwhile, the housing rate of urban residents was 96%, and the average value of each house had reached 1.87 million yuan ($274,200). This information came from the National Bureau of Statistics website.

A Chinese finance analyst asked: "If 60% of the employed population in China had a monthly income of less than 3,000 yuan, why was there such a big contradiction between the two (salary and home prices)? Do you think the figures given by the National Bureau of Statistics are consistent with real life?"

Into this confusing maelstrom, we must assume that China is returning to the "communist" habit of releasing false statistics – a common problem that had gradually improved over time, but it now appears that senior officials have reverted to their former habit.