China’s economy struggles as consumers tighten belts
BEIJING— With home sales crashing, real estate agent ZhangYonggang is tightening his belt, part of a plunge in Chinese consumer demand that is a bigger threat to economic growth than Beijing’s tariffwarwith Washington.
Zhang, whoworks in the central city ofTaiyuan, said his office sold no apartments lastmonth after Beijing tightened lending controls in July to rein in housing costs and debt. Zhang, 42 and married with a teenage son, said his income has fallen by half from a year ago.
“I have no money to buy a home and no plans to change cars,” Zhang said. “It is definitely the toughest time I’ve ever seen.”
Communist leaders are counting on consumers to power China’s economy, replacing trade and investment. But shoppers, spooked by the tariffwar and possible job losses, are cutting spending on cars, real estate and other bigticket purchases.
Economic growth sank to a threedecade lowof 6 percent over a year earlier in the quarter ending in September. That is stronger than mostmajor countries but a strain for Chinese companies that need to repay debt.
Factory activity shrank more than expected in October, according to an official trade group, the China Federation of Logistics& Purchasing. Analysts said that suggested an uptick a month earlier didn’t mark the start of a recovery.
The Chinese slowdown has sent shockwaves through the global economy.
Companies fromApple to Tiffany’s have reported weaker sales as Chinese consumers and tourists spend less. China’s demand for iron ore, copper and other commodities has softened, depressing global prices.
Communist leaders express confidence China can survive President Donald Trump’s tariff hikes on its exports.
On Thursday, the ruling party’s Central Committee affirmed support for private business within an economy dominated by state industry and gave no sign of plans to change economic strategy.
But leaders openly fret over slumping consumer spending and other domestic activity.
Premier LiKeqiang, the top economic official, told local leaders lastweek to fight “downward pressure” on the economy and “make sure targets for this year are achieved.”
“Many real economic entities are struggling amid weak domestic demand,” the premier said at a meeting with provincial governors, according to a Cabinet statement.
Beijing has tried to stick to plans to nurture selfsustaining, consumerdriven growth instead of resorting to stimulus, which usually means splurging on construction paid for with bank loans. That might reignite a surge in debt that forecasters estimate has risen as high as the equivalent of 300 percent of China’s annual economic output.
“China is willing to accept slower growth, but only up to a point,” Rory Green of TS Lombard said in a report.
If job losses spike, “of course Beijing will have to step in with amajor stimulus,” Green said.
Trump’s punitive duties on billions of dollars of Chinese goods in a fight over Beijing’s trade surplus and technology ambitions have battered exporters. But their impact on the rest of the economy has been smaller than some forecasters expected.
Andtrade overall is stronger than expected. Shipments to theUnited States fell nearly 11 percent in the first nine months of 2019, but exports to thewholeworldwere off only 0.1 percent.