Behavior patterns of Chinese consumers show signs of changing given the economic slowdown and structural change. According to an Alpho analysis, it is probable that Chinese tourists overseas will significantly decline together with the reduction in Chinese savings. That will result in reduced capital flow to other countries including in South Asia, the Middle East, Europe and the US.
Based on the International Monetary Fund’s estimates, the Chinese economy is expected to incur a trade deficit in the next two years. While China has been proud of its trade surplus since 2001, it started to gradually decline after the financial crisis in 2008. Currently, it is moving close to zero.
The main reason is probably the sharp increase in international tourism of Chinese residents, thanks to the increasing wealth of the middle class. According to available sources, the volume of Chinese people traveling abroad increased from 42 million in 2008 to 162 million in 2018, representing a growth of 252 percent. This trend generated a deficit of $250 billion last year.
Based on data from OECD, savings of Chinese households increased sharply from 28 percent in 2000 to 39 percent in 2010 and still stay relatively high.
The Chinese population is aging and this leads people to start spending more than they earn and consequently push the savings level downwards. The most recent figure of savings was 36.1 percent in 2016.
In its global economic outlook, the IMF reduced China’s 2020 growth forecast from the original estimate of 6.6 percent to 5.8 percent. There is a wind of change in the way Chinese consumers have been behaving so far.