China's weak economy, including an unstable property market and weak consumer demand, is posing risks to global markets and economies like the US, according to experts.
Financial uncertainty in China has led to a lacklustre second half for Hong Kong's retail sales, increasing the risk of deflation and undermining consumer confidence, according to PwC.
China faces challenges in rebalancing its economy towards increased consumer spending due to the economic growth model that relies heavily on investment in property, infrastructure, and industry, as well as the reluctance of households to spend and the limited social safety net; implementing demand-side measures would require difficult decisions and potential short-term pain for businesses and the government sector.
China's economic model, driven by industrialization and exports, is showing weaknesses with an imbalanced economy, low demand, slumping trade, and a struggling property sector, highlighting the need for structural reforms to boost domestic consumption and confidence.
Costco stores in China are experiencing high foot traffic and strong sales, contrasting with slower retail sales growth in the country, as foreign brands continue to expand and target the premium market. However, economic uncertainty and a decline in ad spending raise concerns about China's future growth.
China's middle class, which has grown significantly in the 21st century, is facing challenges as social mobility stalls and the gap between the wealthy and the rest of society widens, leading many to question if China's economic rise is coming to an end.
China's retail sales and industrial production exceeded expectations in August, with retail sales growing by 4.6% and industrial production growing by 4.5%, but fixed asset investment lagging behind at 3.2%, indicating potential instability in the external environment.
China's middle class is becoming more conservative and cutting back on luxury spending and investing in order to prioritize saving, supporting parents, and preparing for potential health problems, indicating a shift towards safety and short-term sustainability rather than conspicuous consumption and long-term investment.
Chinese households are increasingly opting for domestic brands as their budgets tighten and national pride grows, with home-grown brands in cosmetics, clothing, and household appliances seeing a rise in market share, although analysts say Beijing needs to do more to revive consumer confidence.
Europe's luxury brands are facing challenges with a slowdown in the Chinese economy and uncertainty over interest rates, leading to a decline in their stock prices and rising concerns over the outlook for luxury consumption across the US, Europe, and China.
Chinese consumers are gravitating towards discounted prices, leading to a price war among coffee store giants such as Luckin Coffee and Cotti Coffee, as shoppers aim to save money in response to a slumping economy and reduced incomes, signaling a worrying shift towards thrift in China's consumer spending habits.
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