Illustration: Chen Xia/GT
In the Shuangjing area of Beijing,
MK sports Korea there lies a shopping supermarket known as Wankelai, renowned for its offering of low-priced, discounted clothing. Just a few hundred meters away stands a well-known shopping center, Viva Plaza, which hosts a large number of consumer brands including DJI, the drone maker well-known to middle-class consumers.
Reuters published an article on Monday, titled "In deflation-hit China, one store holds flash sales four times a day," which depicted the discounting scenarios at Wankelai, attempting to underscore the "deflationary pressures" and the anxiety of some consumers over the uncertainty of jobs and incomes. The article did not specify Wankelai's exact location, vaguely mentioning it as being outside Beijing's financial district. It's unclear whether customers keen on participating in flash sales at Wankelai would later visit the premium consumer brands at Viva Plaza.
China is a vast and complex market, home to about 1.4 billion people. This market encompasses numerous facets. One aspect is the consumer preference for discounted and affordable goods. But China's consumption landscape is rapidly diversifying, witnessing the emergence of more high-end brands, premium services, and the rise of emotional and innovative consumption patterns. As the consumption landscape evolves, Chinese consumers are increasingly able to make choices that cater to their diverse needs, highlighting a growing trend toward personalization. This, in itself, is a testament to the ongoing development and maturation of the Chinese consumer market.
In tandem with the consumer sector, progress on the production front in China is also advancing. With technological advancements, production costs have been further reduced, allowing a portion of the profits to be passed on to consumers, thereby increasing the room for discounts. More importantly, as China's manufacturing industry accelerates its transformation and upgrading, new products and designs are continuously introduced, speeding up product iteration.
In the face of fierce market competition, some older models and generic products have been tagged with discount labels. At the same time, new products, designs, and high-quality items are emerging constantly. Many products, without any discounts and even sold at premium prices, are also doing well. This stimulates enterprises to continuously increase innovation and improve product quality in pursuit of greater profits. This intense competition on the production side, in conjunction with the continuously developing consumer market, has contributed to the healthy development of China's economy.
Reuters, citing analysts, claimed that the success of businesses akin to Wankelai is fueling deflationary pressures, a notion that is baseless. For instance, do hot sales of luxury consumer goods, such as high-end brand smartphones, lead to inflation? The answer is no. Product diversification, offering consumers more choices, only helps in establishing more reasonable prices, which aid in curbing both deflation and inflation.
Flash sales should not be equated with deflationary pressures. Dong Lijuan, an official with the National Bureau of Statistics (NBS), said on Sunday that the moderate price recovery trend remains unchanged in China. Although China's consumer price index (CPI) decreased 0.7 percent year-on-year in February, this was primarily due to factors such as the Spring Festival date shift. After adjusting for the Chinese New Year effect, the CPI rose 0.1 percent year-on-year in February, according to Dong.
While China's economy is experiencing stable and progressive growth, with a moderate rebound in prices, this does not imply that challenges are absent at the micro level, nor does it mean that each of the approximately 1.4 billion people in China will be free from consumption-related issues. The Chinese economy is undergoing a structural transformation, which is expected to further unleash growth potential. However, for individuals, keeping pace with the rapid economic transition requires considerable effort. In this process, some challenges must be dealt with.
In recent years, China has implemented a series of policy measures to expand employment opportunities. Concurrently, the country has been enhancing its support for compulsory education, basic pension systems and basic healthcare.
According to data from the NBS, the nationwide per capita disposable income of residents and the per capita consumption expenditure are continuously growing. The Chinese economy is on an upward trajectory. In this context, flash sales cannot be simplistically equated to deflationary pressures.
