Table of Contents
Executive Summary
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- Impact on the Economy
- Impact on Consumer Spending
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- Figure 1: Confidence in improving future finances, 2015-2020
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- Figure 2: Summary of overall consumer spending in the short, medium and long term, April 2020
- Key consumer segments being impacted
COVID-19 China Context
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- Figure 3: Cumulative confirmed cases of COVID-19 in China, January to April 2020
- Figure 4: Status of returning to work, China, March and April 2020
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State of the Economy – The Story So Far
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- Q1 GDP maintained 93% of the level last year, despite losing nearly two months’ productivity
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- Figure 5: Quarterly growth of GDP in China, 2000-2020 Q1
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- Figure 6: Monthly Purchasing Managers’ Index, China, 2001-March 2020
- Consumers feel an income squeeze immediately after the outbreak
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- Figure 7: Monthly surveyed urban unemployment rate, China, 2018-March 2020
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- Figure 8: Consumer Price Index, China, 2014-March 2020
- Figure 9: Growth of per capita disposable income, China, 2014-2020 Q1
- March marks the start of recovery but it is slow-paced and cautious
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- Figure 10: Monthly growth of total retail sales of consumer goods and food service in China, 2000-March 2020
- Figure 11: Growth in total value of imports and exports, China, 2017-March 2020
2020 Outlook
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- Fundamentals of the economy remain solid
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- Figure 12: Contribution to GDP growth by key industries and drivers, China, 2000-2019
- IMF projects China will still grow in 2020 and rebound strongly in 2021
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- Figure 13: IMF GDP growth projection of major economies for 2020 and 2021
- Stabilising employment will be the key to the economy in 2020
- Rebound of consumer confidence will be slow and cautious
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- Figure 14: Concern over COVID-19 and its impact on lifestyle, March and April 2020
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- Figure 15: Summary of overall consumer spending in the short, medium and long term, April 2020
- Speed of recovery will vary by sector
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- Figure 16: Nominal growth by retail sales of consumer goods, 2019, January-March 2020
- Implications for business strategies
- Keep innovating and accelerate the pace
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- Figure 17: Examples of brands communicating new offerings on their flagship stores on Tmall, April 2020
- Embrace e-commerce
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- Figure 18: Example of luxury and fashion brands selling on WeChat, April 2020
- Struggling sectors need to improvise and adapt
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- Figure 19: Example of foodservice and hotel adapting to challenging times, April 2020
Change in Consumer Finances
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- Substantial financial impact of COVID-19
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- Figure 20: Changes in financial situation, December 2019 and March 2020 and April 2020
- Under-30s feel the financial hit more, with more polarised situations
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- Figure 21: Changes in financial situation, by age, March 2020 and April 2020
- Self-employed and privately-owned businesses are more vulnerable
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- Figure 22: Changes in financial situation, by employment, March 2020 and April 2020
- Lower tier cities recovering faster
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- Figure 23: Changes in financial situation, by city tier, March 2020 and April 2020
Confidence in Future Finances
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- Obvious drop in confidence after the outbreak, but the majority are still positive about the near future
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- Figure 24: Confidence in improving future finances, 2015-2020
- At least another four months for confidence to rebound to pre-COVID-19 level
- 40s and 50s are more certain about the future
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- Figure 25: Confidence in improving future finances, by age, March and April 2020
- Self-employed rely on demand to recover not just lifting of lockdowns
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- Figure 26: Confidence in improving future finances, by employment, March and April 2020
- More confidence in lower tier cities driven by state-owned employees and self-employed
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- Figure 27: Confidence in improving future finances, by city tier, March and April 2020
Impact on Spending
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- Immediate after the outbreak: bring the outside in
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- Figure 28: Changes in spending, 28 February to 6 March 2020
- Small indulgences will recover first
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- Figure 29: Changes in spending – spent more, December 2019, March and April 2020
- Big ticket items take longer as financial stress starts to weave in…
- But long-term outlook is still optimistic once confidence is restored
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- Figure 30: Changes in spending – spent more, by change in finances, April 2020
Appendix – Methodology and Abbreviations
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- Methodology
- Abbreviations
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