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overnight, the economy took a turn for the worse! the real estate market is booming, scenic spots are booming, and consumption is booming. is the middle class okay anymore?

2024-10-07

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author | wujiang

have you found out?the economy seems to have changed overnightget excited!

as policies hit the accelerator a week before the national day, a new round of stimulus kicked off, and the long-sluggish property and stock markets were transferred from icu to ktv.

——looking at the property market, there is a “housing war” going on every day during the national day holiday:

all 395 apartments in a community in shenzhen were sold out in just 8 hours. some sales offices in shanghai were filled up on the first day of the seven-day holiday. the number of new home subscriptions in beijing tripled compared with the same period last year. experts say that the long-lost "silver ten" in the property market is back...

——looking at cultural tourism, there is no hottest thing, only more hotness:

ailao mountain in yunnan has changed from a "human forbidden zone" to an overcrowded "internet celebrity scenic spot";

on the first day of the holiday, the total number of movie screenings was 464,000, setting a new record for national day screenings in chinese film history;

qingdao, a popular tourist city, set a consumption record of 696 million yuan in four days;

the average daily traffic volume on highways across the country has reached a new high for the same period in the past four years, and the hot scene has reached a higher level than last year;

......

——home appliances and cars are also picking up:

a supermarket in wuxi, jiangsu, had an average daily turnover of green smart home appliances during the national day period of 4.1 million yuan;

henan’s key monitored retail enterprises’ sales of electrical appliances and automobiles increased by 31% and 14.2% respectively year-on-year;

......

the stock market and property market are rising, and the middle class, which had the least confidence in consumption, is returning. as they gradually repair their "balance sheets," a positive cycle of consumption is taking shape.

at the same time,the ultimate move continues to be released,how long can the wealth effect formed in the stock market and property market last? this will be the biggest key to affecting economic trends.

in the first half of this year, overall consumption performance was sluggish, and the growth rate of total retail sales of consumer goods nationwide has been declining. it has fallen all the way from 10.1% in november 2023 to 2.3% in april this year.bottomed at 2.0% in june

source: national bureau of statistics

especiallyconsumption in first- and second-tier cities suddenly stopped working, and it was all driven by consumption in third- and fourth-tier cities.for example, why did it fall to 2% in june? judging from the segmented data, the overturn in first-tier cities is too obvious:

consumption growth rate in the four major first-tier cities in china: beijing, shanghai, guangzhou and shenzhensubstantially lower than the national level, social retail growthconvert all to negative numbers

beijing -9.4%;

shanghai -6.3%;

guangzhou-9.3%;

shenzhen -2.2%.

among them, car sales in beijing, guangzhou, and shenzhen dropped by 13%, 8.3%, and 3.2% respectively. shanghai is even more exaggerated. new car sales fell by 30.6% year-on-year, and new energy vehicle sales fell by 38.8% year-on-year.

the swire series, the barometer of luxury sales, also faced the problem of declining commercial sales growth in the first half of this year:

the retail growth rate of taikoo li sanlitun in beijing was -3.5%;

the growth rate of chengdu taikoo li was -17.2%;

the growth rate of shanghai industrial taikoo hui was -19.6%...

it is said that the once proud lv counters in some shopping malls have received discounts and promotions. even hermès no longer requires stocking. the salary performance of the counters who originally earned 30,000 to 40,000 yuan per month has also shrunk.

that is to say,the four major first-tier cities are dragging their feetnational consumptionhind legs, this is unheard ofthing

the performance of second-tier cities is also unsatisfactory.the social retail growth rate of 17 second-tier cities was lower than the national level in the first half of the year (3.7%), take a few outstanding ones as examples: hangzhou 0%, xiamen 2.2%, ningbo 2.9%...

throughout the first half of the year, the social retail growth rate in first- and second-tier cities was only 1.98%, lower than the national average.

cartography: intelligent valley trends

in contrast, third- and fourth-tier cities have become more stable, with zero social growth during the same period.reached 4.76%, nearly 1% higher than the national average

which folks from third- and fourth-tier cities are taking up the banner of consumption?

first of all, i want to thank the people of shaoxing. shaoxing’s social retail growth rate reached an astonishing 10.2%;

quzhou people are not to be outdone, with quzhou following closely behind with 9.0%;

there are also lishui 8.3%, yangzhou 7.8%, huai'an and suzhou 5.0%...

first- and second-tier cities are gradually tightening their pockets, while friends in third- and fourth-tier cities are "spending money like water".

this "gold" is real gold. in the three and a half years ending in september 2023, industry leader chow tai fook has only opened more than 70 stores annually in first-tier cities, but has accumulated1,805 new stores opened

in the 2024 fiscal year annual report, chow tai fook managing director huang shaoji revealed, “the company will adopt strategies such as closing poorly performing stores, opening new stores, and changing stores.focus on expanding the gold jewelry market in third- and fourth-tier cities in the mainland。”

chow dasheng, which is also at the top in terms of volume, has 4,831 stores as of the end of september 2023, including 3,299 stores in third- and fourth-tier cities and below.accounting for nearly 70%

it is the consumer enthusiasm in third- and fourth-tier cities that has attracted more and more offline stores to take root.

starbucks, which is positioned in the "high-end market", claims to make its storescovering more than 300 prefecture-level markets and more than 3,000 county-level markets across the country.

in the fourth quarter of 2023 alone, starbucks has entered 28 new county-level cities.

friends in third- and fourth-tier cities not only started to wear gold and silver, but also had coffee in their left hand and milk tea in their right hand. they also showed no mercy in upgrading their travel tools.

according to data from the ministry of public security, the penetration rate of new energy vehicles in rural areas of my country has increased by 13 percentage points in the past six months.

just look at the car sales from january to july 2024.

sichuan garze increased by 286.49% year-on-year;

yunnan diqing 86.20%;

shanwei, guangdong 84.52%;

turpan, xinjiang 69.04%;

inner mongolia alxa league 47.28%;

anhui huangshan 39.01%;

......

the consumer market is accelerating differentiation, and third- and fourth-tier cities have long become a ray of hope.

but such a pattern is obviously not enough to support economic recovery. after all, first- and second-tier cities are the main force of china's economy.

as we all know, apart from industry,first and second tier citieseconomic drivers ofsupported by finance, real estate, and consumption; third- and fourth-tier cities rely on tourism, agriculture, transportation industrylord.

in the past two years, the financial industry rectification, internet anti-monopoly, and the elimination of education and training groups...the incomes of practitioners in these high-paying industries in first- and second-tier cities have inevitably been affected.

to make matters worse, the external cold weather has hit, and a large number of investors in finance and real estate have suffered investment losses. "it is too difficult to make money" has become a mantra for many people.

this resulted in that in the first half of 2024, the per capita disposable income of beijing, shanghai, and guangdong ranked among the highest in year-on-year growth.top three in the country, on the contrary, the per capita disposable income of people in tibet, xinjiang, gansu and other places has increased far ahead.

at the same time, residents in first- and second-tier cities are generallydebtbent over. 2023,the leverage ratio of residents in first- and second-tier cities is as high as 73.7%, while that of residents in third- and fourth-tier cities is 63.5%. the difference between the two is about 10%.

mckinsey’s “2024 china consumption trends survey” report found that,the new middle class in first- and second-tier cities is a large group of people who have no confidence in consumption.

the new middle class in the first and second tiers are between the ages of 26 and 41. they are often highly educated talents who stay in big cities, and their average monthly household disposable income is around 20,000 to 30,000.

an average of 20,000 to 30,000 yuan per month may seem like a lot, but in the situation where they are "both old and young", expenses such as various insurances, medical expenses, cram schools, etc. cannot be reduced, and the burden of living is indeed not small.

asset depreciation, loan pressure, unstable income, and high living burdens are all weighing down. people in first- and second-tier cities can only cut back on food and clothing and curb consumption.

in contrast, most residents in the third and fourth tiers are more pragmatic about real estate, focusing on self-occupation, and will not increase leverage too high. at the same time, their assets are mainly bank deposits. the sudden wealth in the past few years has nothing to do with them, and the collapse in the past few years has nothing to do with them either. the debt is small and the wealth does not fluctuate greatly, which makes it much easier.

the wealthy middle-aged and elderly people in the third tier still have high confidence in consumption.they have worked hard for half their lives and have saved their houses, cars and connections. their children have grown up and have enough food and clothing. the pace of life is not as complicated as in big cities, and the cost of living is not as high. of course, they are willing to spend more money on daily life such as catering, household goods, household appliances and furniture. summarize their lives in two words——comfortable

it seems like this,in terms of consumption,it’s not that third- and fourth-tier cities have made rapid progress, but that first- and second-tier cities have regressed too much.

to boost economic confidence, we must start from the residents of first- and second-tier cities, and apply strong medicine to cure the disease before there is hope.

this is why, the major policy moves before and after the national day holiday,all of them hit the wallets of first- and second-tier residents more directly, and fully boosted the wealth effect of the stock and real estate markets.

after all,consumptionwhether it is good or not, ultimately depends on expectations, and asset prices are the most intuitive reflection.previously, after the real estate engine stalled, the disappearance of the wealth effect led to rising savings, early repayments and sluggish consumption, causing the chinese economy to fall into a negative spiral of asset price recession. in the first half of 2024, chinese residents' savings increased by 11.46 trillion yuan, of which household savings increased by 9.27 trillion yuan.

if the wealth effect cannot be sustained, even if interest rates continue to fall, people will not be willing to withdraw their money and continue to“savings is king”, it is difficult to fully unleash the consumption potential.

on september 24, the three major financial departments (the central bank, the state administration of financial supervision, and the china securities regulatory commission) issued8 major rescue policies

immediately afterwards, the top-level meeting on the 26th released two signals:

first, the top management is concerned about the current economic performance, and their intention to stabilize the economy is urgent;

the second is to focus on the real estate and capital markets. the real estate market and stock market are important assets for residents. only by stabilizing asset prices can expectations be stabilized.

this is the most positive and progressive stance china's top leaders have taken on macro policy since the "four trillion" stimulus plan in the fall of 2008. the policy prescribes the right medicine, and it directly calls out“we must promote the real estate market to stop falling and stabilize”

in addition to the real estate market, senior officials are even more determined to restore the stock market. on the 24th, the three departments announced the creation of securities, funds, and insurance companies at a press conference.swap facilities and creation of special refinancing for stock repurchases and holdings increase, the initial quotas are 500 billion and 300 billion respectively, and can be increased in the future.

especiallystock repurchase and holding increase special loan, is unprecedentedmeasures to use low-cost bank funds to invest in the stock market, which directly benefits the major shareholders of companies with high dividend rates, that is, central state-owned enterprises and the finances behind them.

the meeting on the 26th pointed out that efforts should be made to boost the capital market, vigorously guide medium and long-term funds to enter the market, and open up the blocking points for social security, insurance, financial management and other funds to enter the market.

we will support mergers, acquisitions and reorganizations of listed companies, steadily advance the reform of public funds, and study and introduce policies and measures to protect small and medium-sized investors.

the short-term results are very significant——

on the 24th and 26th, the shanghai and shenzhen stock markets surged, with the shanghai stock market breaking through the 3,000-point mark in one fell swoop. the "three thousand points defense war" that had been called for more than half a year was completed in two days.

on september 30, the transaction volume of the shanghai and shenzhen stock markets exceeded 2 trillion, setting a record since june 15, 2015.

in other words, after the real estate market is "stable" and the wealth effect of real estate subsides, the stock market will have unprecedented growth.strategic value

the property market is rising, the stock market is rising, and the assets in the hands of the people are appreciating.consumption expectations are naturally higher.a forward cycle begins to turn.

just focusing on the national day holiday, consumption of cultural tourism, home appliances, cars, and real estate immediately became popular:

——on october 6, the “national day” golden week consumption data released by meituan showed that in-store consumption of daily life services nationwide increased by 41.2% year-on-year.the average daily consumption of tourists increased by 69.6% year-on-year during the previous holiday season.

——in the five days before national day, the average daily consumption of restaurants and restaurants increased by 33.4% compared with last year’s national day holiday. in the dining scene, tourists' consumption increased by more than 75% compared with the 2023 holiday.

——there is a trend of replacing home appliances with new ones across the country. according to data from suning.com, in the three days before the national day holiday this year, sales of first- and second-level energy-efficient tvs increased by more than 100% year-on-year, sales of 100-inch large-screen tvs increased by 134% year-on-year, and package purchase orders increased by 145% year-on-year.

——the shenzhen real estate market ushered in the "golden week", with average daily visitors and transaction volume increasing 4 to 5 times. some home buyers even paid deposits to buy houses late at night, and 395 houses in one community were sold out in just 8 hours. there are not enough golden eggs to smash!

all kinds of fiery performances are also closely related to the wealth effect of the stock market.

according to wind data, in just four days before the national day holiday, the total market value of a-shares jumped from 74.98 trillion to 84.86 trillion, which is equivalent to an increase in market value of approximately 10 trillion. if distributed equally to each investor, each person would earn almost 47,000.

"the cattle come back quickly"these four words have ignited the confidence of china's 200 million stockholders and 700 million christian citizens.

will the property market and stock market develop as expected by the policy? will a healthy, sustainable capital market with wealth effects emerge? will the engine of consumption be ignited?

the country has made up its mind, and the next step is to see the efficacy. this time, we must go all out.