China's consumption downgrade: Skip avocados, cocktails and having kids

China's consumer culture has by no means ground to a halt. But in the streets and on the Chinese internet, the talk is about cutting back in ways big and small.

BEIJING (NYTIMES) - Chen Siqi does not eat out so much anymore. Li Keli cut down on travel and takes her son to a public playground instead. Wang Jiazhi stopped dating.

Welcome to China's "consumption downgrade" culture, a potentially worrisome development for Beijing and the world.

For years, the conversation in China was about "consumption upgrades". As the economy took off, China's middle class - now more than 400 million strong and still growing - decided to spend those bigger paychecks. It traded up from local brands to Nikes, from cheap phones to iPhones, and from tea to US$5 (S$6,80) Starbucks lattes.

Today, China's economy is slowing, and shopping has slowed with it. The stock market is slumping. China's currency has lost some of its value. The trade war with United States President Donald Trump has left many Chinese feeling pessimistic about the future.

China's consumer culture has by no means ground to a halt. But in the streets and on the Chinese Internet, the talk is about cutting back in ways big and small.

Quit avocado. Ride bikes instead of taxis. Drink beer instead of cocktails - and make sure that beer is not craft. Order a medium-size milk tea instead of a large. Give up the gym, and take up dancing in public squares like a grandmother.

Some people joke about eating meat instead of tofu, as American tariffs have made imported soybeans more expensive.

Perhaps most worrisome for China's leaders, many young Chinese are increasingly reluctant to have children.

A post headlined "This Generation of Young Chinese, Brace for the Bitter Days Ahead", by blogger Ming Na, received more than 300,000 views on the social media platform WeChat last weekend. She advised young people to stop going to shopping malls and nightclubs.

"The age of the consumption downgrade," Ms Na wrote, "has arrived with a big crashing sound."

Ms Chen hears the message. The 30-year-old accountant in Beijing recently bought a garbage bin on Pinduoduo, a Chinese app focused on cheap, sometimes iffy, goods that initially enjoyed appeal only in rural areas. She makes about US$1,400 a month after taxes, but nearly half of it goes to the rent on her one-bedroom apartment.

Ms Chen said she had reached the age when she wanted to live in her own apartment instead of sharing with others. To save money, she now cooks at home a few times a week and buys clothes mostly from cheap online vendors and the Japanese basics brand Uniqlo.

"I would like to have a nicer lifestyle but don't know how I can afford it," she said.

A Chinese consumption downgrade could be felt around the world. Chinese spenders have been a key driver of their country's economic growth in recent years. China, in turn, has played a major role in global growth. Chinese consumers help global companies like Apple, General Motors, Volkswagen and many others. A consumption downgrade could also embolden Mr Trump in his trade fight with China, as he gambles that Beijing cannot take much more economic damage.

On paper, the Chinese economy looks strong. Look closer, and the cracks begin to show. Retail sales this year have grown at their slowest pace in more than a decade. Wages in the private sector are growing at their slowest pace since the global financial crisis. The stock market has fallen by one-fifth.

Last week,, a Chinese e-commerce company, reported disappointing quarterly results.'s focus is providing China's growing middle class with quality products.

Investors are watching closely to see whether the Alibaba Group, China's biggest online retailer, will report weak results as well on Thursday (Aug 23).

Long-term factors are driving down spending among young people in particular. The cost of education is going up. Housing in rich cities like Beijing has become unaffordable for many.

Housing is so expensive that Mr Wang Jiazhi moved out of his own home. The 34-year-old semiconductor engineer in the southern city of Shenzhen bought a one-bedroom apartment in 2016. In addition to a mortgage of more than US$700 a month, he needs to pay his relatives back for the money he borrowed for the down payment. So he rents his apartment and shares a four-bedroom apartment with nine other men. This way, Mr Wang - who makes about US$2,000 a month after taxes - saves US$160 a month.

Like many Chinese men, Mr Wang believes he needs an apartment in order to find a wife. But he is under so much pressure with his mortgage and debt, and with supporting his ageing parents in the countryside, that he has had to postpone his plan for marriage. His prospects were not good anyway: To save money, he has stopped dating.

"I work long hours every day," he said. "It makes me feel occupied."

So, the consumption downgrade is in.

But even as China's stock market sputters, shares in companies that make affordable staples like erguotou, a cheap hard liquor, and pickled vegetables have bucked the trend.

"Drink erguotou with pickled vegetables," said Ms Na, quoting popular Chinese Internet memes. "Take a ride with Mobike," she added, naming a bike-share company that offers two-wheeled rides for pennies.

Even the only children of middle-class families, a group that is largely financially secure, feel anxious about their future.

Ms Wu Xiaoqiong, 28, is the only child of a civil servant and a doctor in the eastern province of Hefei. She works at a big Internet company in Beijing, with monthly pay of US$1,500 after taxes.

When she got married last year, her parents and her husband's parents each put in half of the down payment for a one-bedroom apartment - a typical arrangement for many Chinese middle-class families. Nearly two-thirds of the couple's monthly income goes to the mortgage and towards the rent of a small apartment in Shanghai, where her husband works at a state-owned bank.

Her consumption downgrade plan is to remain childless.

"We have almost no savings and no retirement plans," she said. "My parents have been supporting me financially. How can I afford a child?"

Others are saying no to bigger households - a problem for a Chinese government worried about the country's ageing population.

When asked whether she would consider having a second child, Ms Li Keli, an accountant at an electronics-maker in the southern city of Huizhou, said, "Absolutely not." Her factory laid off two-thirds of its workers in June when the US-China trade war escalated. Her monthly pay of US$500 was cut by 10 per cent.

She used to take her seven-year-old son to visit nearby cities on weekends. Now, she takes him to the playgrounds of big residential complexes because they are free.

Many high earners feel anxious as well. Ms Chen Ying, 33, an architect in Shanghai, said her consumption downgrade plan involved not shopping in department stores.

Ms Chen said she did not expect her pay to rise too much in the future. Her younger colleagues do not make as much as when she first started four years ago, and her pay now is lower than that of older colleagues with similar experience four years ago.

She used to get pay raises of 15 per cent to 20 per cent a year - rates that were not uncommon at fast-growing industries in China in the past decade. Now, she expects the raises to be 5 per cent, if she gets them at all. She has started to think about retirement, but does not know where to begin.

"In the past, we had many inflated expectations," she said. "Now, we don't expect so much."

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