China analysts disagree whether the country is experiencing a “consumption downgrade” as consumers look to reduce spending due to the rising cost of rent and mortgage repayments, Caixin reports.
The idea of a “consumption downgrade” has taken hold in China in recent weeks amid data showing the slowest growth in retail sales since 2003. Brokers UBS Securities also released data showing that only 25% of consumers in first-tier cities plan to purchase big-ticket household appliances, down 11 percentage points year-on-year.
At least three Chinese provinces have issued warnings about a “consumption downgrade,” but some analysts are not convinced the trend is as serious as some reports suggest.
Li Xunlei, an economist at Zhongtai Securities, said that he did not believe China was experiencing a consumption downgrade, but that policymakers should pay close attention to two economic problems in particular. One is that China’s rising household debt levels may slow consumption, and the other is that the income levels of China’s poorest households are growing more slowly than before, which could indicate that more migrant workers are losing their jobs.