The festive Chinese New Year has come to a close, and now Chinese consumers are returning from the celebration. However, don’t expect the economy to improve just yet. In fact, spending is predicted to slow down, which is bad news for Beijing. China’s economy and markets have already been weak coming into 2024, and soon after COVID-19 restrictions ended, China experienced their second Chinese New Year this year. This has caused the entire country to go on a public holiday break until the end of the week, boosting consumption and travel. While the data on consumer spending for the season is not yet available, Chinese authorities are optimistic for a boom, calling 2024 the “Year of Consumption Promotion.” However, analysts are less upbeat, and Nomura analysts expect China’s economy to worsen into the spring due to reasons such as the inability of Beijing to revive the battered property sector, and a slow down in consumer spending on services. Analysts note that service consumption growth could slow sharply, and geopolitical tensions amid the US election season do not help the situation in China. Additionally, economic data does not signal a positive outlook, particularly in the stock market, which wasn’t looking pretty against the backdrop of a decrease in US stock markets overnight. Hang Seng China Enterprises Index fell as much as 2%, and the Hang Seng Index fell as well, recording losses since their peak in 2021. Even Chinese leader Xi Jinping is set to pay personal attention to the market slump by replacing the country’s top markets regulator. However, analysts are still skeptical if the move will solve fundamental economic and market problems in China. Mainland stock markets are closed this week for public holidays.
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