A bunch of roses during the Qixi Festival, an ancient holiday celebrating love and loyalty.
People have been flocking to social media to show off new iPhones and Louis Vuitton bags given to them by their partners, as well as photos of dinners at upscale restaurants, during China's version of Valentine's Day, which usually falls in July or August every year.
That was when China's economic growth was the envy of the world. This year the festival was on Saturday, and the story was completely different. People have taken to the Internet to complain about the lack of gift-giving and festive spirit, citing the stagnant economy and difficult job market.
The tag became "Sharp decline in consumption on Chinese Valentine's Day. Are young people unwilling to pay the love tax?" The most trending topic on Weibo on Saturday, attracting 200 million views.
"The Qixi Festival is not as strong as previous years. It almost looks deserted," one user wrote.
Some flower shop owners took to Xiaohongshu, another popular website, to complain about the lack of customers, and posted pictures of unsold flowers lining the sides of their shops. CNN has been unable to independently confirm their claims.
Other posts sadly recalled that couples had money to spend when the world's second-largest economy was doing well. Now China is suffering from a series of problems ranging from slowing consumer spending to an ongoing slump in the real estate market and a mounting debt crisis. Alfred Wu, an associate professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, said that young people, who are accustomed to spending in large quantities during Qixi Festival, now struggling to find jobs.
“I think public sentiment is very bad and consumers are very conservative,” he said, adding that negative sentiment has become a “general pattern” and “not just one festival.”
Market strategist Yip Jun Rong of trading provider IG said the anecdotal decline in spending seemed consistent with “the weak consumption trend we have seen over the past two years,” adding that consumer confidence in China is “hovering around an all-time low.”
On Thursday, a glimmer of hope came from official data showing retail sales, a measure of consumption, rose 2.7% in July, slightly beating expectations for a 2.6% rise reported by Reuters.
However, new home prices fell 4.9% last month, hitting a nine-year low, according to the news agency. The number has fallen for 13 consecutive months, the agency said. Housing prices are a key metric to watch because about 70% of Chinese household wealth is tied up in real estate, which in turn affects spending.
The behavior of China lovers is an important issue for global companies – and the government in Beijing. In recent weeks, a number of Western multinationals, from cosmetics giant L'Oréal to carmaker Volkswagen, have sounded the alarm about weak demand in China as consumer confidence remains stagnant.
This pessimistic mood also affects the Chinese government's efforts to encourage marriage as a way to address declining birth rates and an aging population. Population shrinkage is likely to put a burden on economic growth.
In the first half of 2024, only 3.43 million couples got married, which is half the number recorded for the same period 10 years ago, according to the Ministry of Civil Affairs.
On Saturday, the Chinese Broadcasting Corporation broadcast a video clip containing rare family photos of the young Chinese leader Xi Jinping, his wife Peng Liyuan, and their infant daughter to celebrate their marriage, which has lasted for more than three decades.
But the message failed to convince, as people complained on social media about being unable to raise a family due to their debt or having to work long hours.
“When people born after 1990 now owe tens of thousands of yuan, with '996007' becoming the norm, where do people find the right mood for dating?" asked a Weibo user.
The numbers "996" and "007" refer to the notorious working hours demanded by some of China's largest conglomerates. The number “996” refers to workers who work from 9 a.m. to 9 p.m., six days a week. Some of them are in "007" status, meaning they work every day.
The general pessimism is evident in trade and other data. According to CNN calculations based on official customs data, imports of diamonds used in the jewelry industry in the first half of this year decreased by 28% compared to the same period in 2023.
Diamond supplier De Beers said in its 2024 semi-annual report that “ongoing economic challenges” in China have delayed an expected recovery from a sharp decline in 2023.
According to data released by the State Administration of Foreign Exchange last Friday, China's direct investment commitments, a measure of foreign direct investment in the country, fell by about 15 billion US dollars in the first quarter from April to June. This is only the second time this has happened since 1998, which confirms the country's failure to stop the flow of capital abroad.
Qi Qi Festival, which has been celebrated for thousands of years, falls on the seventh day of the seventh month in the lunar calendar (most of the world uses the solar or Gregorian calendar). According to legend, it is the only day of the year when the legendary lovers Niulang, a cowherd, and Qinu, a weaver, can meet on a heavenly bridge.
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“The only part of the world where consumer confidence remains very low is China,” L'Oréal CEO Nicolas Hieronymus told analysts on an earnings call late last month.
He cited a weak job market and real estate problems as reasons for concern. He added that the lower-than-expected growth in the global beauty sector this year is largely due to lower consumer confidence in China.
Advertising agency WPP ( WPP ) said last week that second-quarter revenue in China fell by about a quarter from a year earlier — and the outlook isn't much better.
“I expect the second half of the year to remain challenging in China,” Joan Wilson, the company's chief financial officer, added on an earnings call. “I expect (revenue) to decline by double-digits for the full year.”
Volkswagen and Mercedes were also pessimistic in their assessment of the Chinese economy.
“I think everyone knows that since we emerged from the Covid-19 restrictions at the beginning of last year, consumer confidence has not returned to normal,” Mercedes-Benz Group Chairman Ola Kaelenius told analysts on July 26. “We don’t know how long it will take,” he said. "Or what it will take for consumers in China to regain that confidence."
Joanne Wilson, the chief financial officer, stated during an earnings call that she "expects the second half to remain very challenging in China." "I anticipate double digit declines in revenue for the entire year."
Mercedes and Volkswagen expressed a similar pessimism about the Chinese economy.
Ola Kaellenius, the chairman of Mercedes-Benz Group, told investors on July 26 that "I think everybody knows that consumer sentiment, it didn't come back" after we started to lift the Covid limitations earlier in the year. "We're not sure how long it will take or what obstacles China's consumers will need to overcome to restore their confidence."
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