Wealthier Chinese individuals keep paying while others do not spend, the survey uncovers

December 13, 2022: -On Thursday, wealthier Chinese were inclined to spend more this year, while wealthier people do not spend even more, McKinsey’s firm found in a survey.

The divergence contrasts with 2019, before the pandemic, when “there was a differentiation in spending amid the two groups,” the McKinsey analysts said. They noted that an official measure of consumer sentiment in China id decreased to an all-time low this year.

Lockdowns and travel restrictions in controlling Covid outbreaks in China increased more widespread this year as the contagious Omicron variant entered the country. A property market decrease also dragged down the economy.

Therefore, the survey found that more than a quarter or 26%, of people with an annual household income of more than 345,000 yuan said they increased their spending by 5% or more from last year.

The trend changed for those with far lower income, less than 85,000 yuan a year. Just 12% said they increased to spend, while 27% scaled back, the report added.

“The more affluent population is confident about their wealth and prospects,” McKinsey stated. “They remain relatively more confident about keeping employed and anticipating salary increases in the future. They also typically already have higher savings,” McKinsey further said.

“So, the more affluent group continues to spend, while lower-income groups are more hesitant and hold spending decisions.”

Across all the wage categories, the majority (about 60%) reported no change in spending this year. The share of the most wealthy that said they spent more was ten percentage points lesser than the 36% reported in 2019.

McKinsey’s survey of over 6,700 Chinese consumers was made in July.

In the months after the national data on retail sales slumped, Covid controls tightened in major cities like Beijing and Guangzhou.