South China Morning Post on October 18 reported that China’s frustrated middle class is feeling the pinch, spending less on luxury things.

Instead of investing the money they now have at their disposal, they are holding onto it amid feelings of insecurity.

Lin Xiaoxia is a Shanghai-based operation director. 

She said that now houses and monthly household income are beginning to decline.

Investing abroad or even purchasing gold [exchange-traded funds] is no longer feasible for regular middle-class people.

According to Ning, a Statistics National Bureau commissioner, a typical Chinese family of three makes between 100,000 ($14,000) and 500,000 yuan ($70,000) annually.

According to the Center for Strategic and International Studies calculations, the middle class spends between $10 and $50 daily.

Angela Luo, a Guangzhou-based lawyer, said it is challenging for civil or criminal lawyers to meet with new clients due to lockdown measures everywhere.

Luo has already braced herself for the extended difficulties. She has put her investment and income plans on hold, including buying a second property.

She also rationally changed several of her spending habits, such as spending on skiing, something she loves.

Four years after the US-China trade war began in 2018, the feeling of security from being able to buy gold or foreign currency and shift their wealth overseas has vanished.

And this leaves them the feeling that they have little room to safeguard their wealth.

Since August, leading banks in China have restricted precious metal trading services for individual clients.

Fifty-six of China’s 70 major urban cities saw a year-over-year decline in first-hand real estate prices in September, an increase of 23 from the same time in 2021.

In September, the China Academy of Financial Research released a report on China Residents’ Investment and Financial Behaviour research.

The report showed that the rate of respondents expecting a return of between 5-10 % also increased to 28 % from 23 % in 2021, while investors expecting a return of 20 % decreased to 16 % from 20 % last year.

KPMG’s China Economic Monitor for the third quarter, released in August, showed that disposable income per capita only rose by 5.1 % year-over-year in the first quarter of 2022 before increasing by just 0.4 % in the second quarter.

The phrase “are you consumption downgrading today?” has also attracted recent public attention.

At the beginning of the trade war, a group on one of China’s leading social media platforms focused on how to accelerate consumption downgrading. 

It has more than doubled its membership to 360,000 since September 2020.

Members seek affordable alternatives to Nike AF1 model trainers, AirPods, or Bose audio equipment. And the recent performance is the mobile-only marketplace Pinduoduo.

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