Consumer spending in China is decreasing because of the country's simultaneous efforts to control soaring prices of real estate and COVID-19 outbreaks, sending a warning to international businesses that staked their future on a more impulsive Chinese consumer.
Retail sales decreased in October 2022, and are expected to continue to decline as Chinese authorities implement widespread lockdowns to contain the recent outbreaks of COVID-19 that are spreading rapidly, and the collapse of the real estate market could worsen despite measures to ease the crisis. The market value of the retail industry in China increased significantly in 2022 over that in the previous years, according to GlobalData.
The market value of the real estate industry in China decreased significantly in 2022 over that in the previous years, according to GlobalData.
Alibaba Group Holding Ltd., the world's largest online retailer, reported net loss, days after defying convention by not releasing sales data for its annual Singles Day shopping bonanza on November 11, 2022.
Although doing business in China has not always been simple for Western corporations, the size of the market and potential for growth made it worthwhile. The pandemic even seemed to briefly draw attention to China's desirability at one point. China was the only major economy to develop in 2020 due to its comparatively rapid recovery from the COVID-19 outbreak, giving many Western industries a lifeline.
China, however, is being battered by wave after wave of COVID disruptions, particularly since the emergence of the highly contagious Omicron variant, and Beijing's belief on squelching even small outbreaks. As a result, China's extended pandemic-induced pullback in retail expenditure looks poised to prolong into a fourth year.
A months-long decline in home prices worsened in October 2022, but the struggling real estate market, which many people in China use as their principal source of wealth and which is thought to account for around a fourth of overall GDP, shows no signs of improvement.
Earlier in November 2022, Beijing introduced additional measures to lessen the impact of the rules, but authorities in both cases reiterated the fundamental ideas guiding their tight methods to contain the pandemic and real estate prices.
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