The Chinese economy is in a bad state. Following the closure of the Isetan department store in Weston, the Longmei Town shopping mall also announced its closure.
China's domestic consumption is sluggish, and the famous Longmeizhen shopping mall in Shanghai has closed down. In the first half of the year, nearly 7,000 stores in China closed down, covering hundreds of companies. As the economy is in a downturn, the average working hours per week for Chinese workers reached 48.6 hours, exceeding the "six-day, eight-hour work system".
The Shanghai Westgate Isetan Department Store ceased operations at the end of June this year due to the expiration of its lease. At that time, many people went there to take photos. Less than two months later, Westgate Plaza was reported to be closed. When our station called the mall to confirm the news of the closure, the mall staff said: "Starting from August 1, all businesses except the US Consulate will be closed."
The Westin Mall posted a closure notice on the 23rd, saying that after careful consideration, Westin Plaza, including the mall, office building and underground parking lot, all businesses and tenants except the U.S. Consulate General in Shanghai, will be closed from August 1st.
Mr. Hu from Shanghai said in an interview with our station that a commercial street in Chuansha New Town was almost empty. There is a building at the famous Golden Crossroads in Shanghai, the intersection of Nanjing Road and Tibet Road. Last week, he and his friends went to dinner there, and two-thirds of the restaurants upstairs were gone. Several large supermarkets near his home are now closed.
"Nanjing Road in Shanghai is the first commercial street in China and is probably one of the best in Asia. The Landmark Plaza on Nanjing Road in Shanghai will also close in 2022. Huaihai Road was formerly called Xiafei Road. This street is also very lively. In the minds of Shanghai people and foreigners, it is of a higher grade than Nanjing Road. There used to be a lot of foreigners here, but now there are very few people in the mall, it is deserted," he said.
Chen Songxing, an adjunct professor at the Institute of National Development and China Studies at the Chinese Culture University in Taiwan, worked in Shanghai for three years, working in Grand Gateway 66 and Lujiazui. As far as he knows, the current situation in these places is not very ideal. "At first, we were worried about the withdrawal of all foreign capital, but now China's own companies can no longer hold on and are moving abroad. The rich must choose their future with their feet, and Shanghai is where the richest people in China are concentrated."
Chinese people's concerns about unemployment and unstable income dampen consumption expectations
The investment community platform quoted incomplete statistics from Yilan Business, saying that in the first half of 2024, at least 6,882 stores in China announced their closures, covering more than 100 companies, including large channel stores such as Walmart, RT-Mart, and Hema, as well as chain catering brands such as Mixue Bingcheng.
The 2024 China Consumer Trends Survey released by McKinsey, a well-known international consulting firm, pointed out that consumers' confidence in the macro-economy is highly correlated with their confidence in their personal and family economic conditions. Overall, consumers' confidence in their personal economic conditions is generally slightly lower than their confidence in the macro-environment.
Among the pessimistic group, various concerns, such as worries about unemployment and unstable income, asset depreciation, increased debt, and increased burden of supporting family members, all suppress consumption expectations. The expected daily consumption growth rate of this group of people is significantly lower than the average level (2.4%).
"It must be that the purchasing power of ordinary people is not enough," said Mr. Hu. Most Chinese people do not have money, but some people in Shanghai have some money. Affected by the economic downturn, they dare not spend recklessly and instead restrain their consumption.
Chen Songxing pointed out that Shanghai is already the best performing first-tier city, while other cities such as Beijing, Shenzhen and Guangzhou have different situations, not to mention other second-, third- and fourth-tier cities. He mentioned that the Third Plenary Session of the 18th CPC Central Committee should discuss the economy, but there is no new idea. "The current group of leaders have no idea about the current economic difficulties, so they continue to cut interest rates and stimulate liquidity. In addition, cutting interest rates and reserve requirements will also help China's national and local debt issuance and reduce interest costs. This also means that the Chinese government will continue to issue bonds to borrow new money to repay old debts, and to reduce the overall interest burden."
Chinese companies lay off employees or extend working hours, with an average weekly working time of 48.6 hours
The Economic Observer quoted data released by the National Bureau of Statistics of China showing that China's average weekly working hours in June were 48.6 hours, the second highest in the past six years, up 2.9 hours from the same period in 2019, and exceeding the "six-day, eight-hour" work system.
Li Shi, director of the Institute of Sharing and Development at Zhejiang University, analyzed in an interview that due to the impact of macroeconomic fluctuations, enterprises are facing survival pressure. Enterprises can choose to lay off employees or extend workers' overtime hours. In order to maintain employment, workers can only choose to accept overtime.
Chen Songxing said that according to China's second quarter GDP growth rate of 4.7%, it is a decline. In addition, China's export industries have overcapacity, and it may be that they are scrambling for export orders in June to avoid tariff increases after July. Under this circumstance, there are so many working hours in a week, but he is conservative about such data, and of course he does not rule out the possibility that companies lay off employees and extend working hours. In China, most jobs are provided by the service industry. He questioned: "With China's domestic consumption being so sluggish, will there be so many working hours demand?"