Chinese consumer spending still affected by COVID

China’s consumer spending has not seen the increase many expected after the lifting of COVID-19 restrictions.

In the latest comments, CEOs of e-commerce companies and Alibaba said the country’s consumer spending has yet to recover from the downturn seen during the pandemic, CNBC reported on Friday (March 10). CEO and CEO Lei Xu said on Thursday, March 9, that the recovery so far is “unbalanced” and that consumer spending may not pick up until the second half of the year, according to the report.

Similarly, Alibaba CEO Daniel Zhang said last month that China’s consumer market has been lukewarm and online sales remain weak, the report said.

Non-Chinese companies have made similar observations. Adidas CEO Bjørn Gulden said this week that he does not expect the Chinese market to recover this year, according to the report.

The Chinese government said on Sunday (March 5) that its economic growth target for the year is 5% – a target that CNBC characterized as conservative – and officials later said they expect consumption to be a major driver of growth, but that it is still reluctant, according to the report.

Official data on China’s January and February retail sales is scheduled to be released on Wednesday (March 15), the report said.

Companies in a variety of sectors have predicted a rebound in consumer spending both in China and abroad after the country’s travel restrictions from the pandemic were lifted.

For example, Starbucks and McDonald’s are opening new locations in China, banking on increased post-pandemic demand in the country.

“I remain more confident than ever that we are still only in the early chapters of our growth story in China,” Starbucks interim CEO Howard Schultz said in early February.

Similarly, LVMH chairman and CEO Bernard Arnault said in late January in the luxury goods field that the reopening of China will bring new opportunities for luxury brands.

“We have every reason to be confident – indeed optimistic – about the Chinese market,” Arnault said at the time. “In Macau, where the Chinese can now travel to, the change is quite spectacular. The stores are full and it has really come back at a very strong pace.”

In the pre-pandemic year of 2018, Chinese consumers bought about a third of the world’s luxury goods.

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