Daliushu Guanxin, a sprawling compound of thousands of
stalls selling everything from clothes to shoes to accessories, is usually
frequented by tourists, students, rural migrants and retirees looking for cheap
goods.
Now, many more shoppers who can afford to spend more have
joined the bargain-hunters, underscoring the weakness in household demand which
has emerged as a key drag on the world's second-largest economy.
"I used to love buying branded clothes," said
teacher Zhang as she sifted through a pile of garments priced between 15 and 50
yuan ($2-$7). "But some of my friends are worried about losing their jobs
and that affects me as well."
With wages and pensions hardly budging and the job market
highly uncertain as more than one in five young Chinese remain unemployed,
households' confidence and spending power are low in the barely growing
economy.
Consumer prices rose just 0.1% year-on-year in August, in
sharp contrast with the surging inflation most other major economies have seen
since the COVID-19 pandemic ended.
"It's really a confidence issue, but the problem is
that there's no particularly good way to resolve that right now," said
Becky Liu, head of China macro strategy at Standard Chartered.
"If you want to restore confidence, you either have to
stimulate real estate significantly, or you have to give cash directly to
households, and I don't think those options are available right now," she
added. The real estate sector, one of the pillars of the economy, is struggling
with massive debt.
Luxury executives have been banking on China to help boost
overall sales in 2023, but the new-found thriftiness of the middle class, which
companies from LVMH (LVMH.PA) to Gucci-owner Kering (PRTP.PA) have courted for
years, could pose a problem.
"I came here for cheap clothes to save on my living
expenses," said a 45-year-old shopper who only wanted to be identified by
her family name, Lu.
This bargain-hunting, however, has proven a boon for
Daliushu's merchants.
A vendor in her 50s who only gave her first name as Yunshan
said she has so many customers visiting her shop at the market that she's
struggling to keep the online store running.
"I am too busy," she said. "I've had to
refuse requests from online customers because I don't have the time to arrange
deliveries."
Another vendor surnamed Wang said that most days, there were
so many customers inside his store that he has to stand outside the shop to
monitor them. He noticed some of his clients looked wealthier than usual.
"One of my customers is a rich woman who used to go to
Japan for shopping, but now she comes to my store," said Wang. "She
is not stupid. It's the same quality, so why spend more money?"