China review from Morgan Stanley – Bloomberg HT

After an expected 9 percent recovery in spending by Chinese consumers this year, Morgan Stanley analysts are projecting a 4.8 percent increase next year. This rate is 0.5 points lower than before the pandemic.

According to the report released by Stanley, this poses a problem for international brands like Starbucks. People are not only more cautious when spending, but they now have more options.

Three factors are putting pressure on the Chinese consumer on the spending side this year, according to Morgan Stanley analysts.

First, China did not distribute incentives to consumers as the US and other parts of the world did post-COVID-19. Second, pandemic restrictions and regulatory changes have eliminated the 30 million service sector jobs that analysts estimated existed before Covid 19.

According to the report, about 20 million of these jobs will return this year and beyond. But analysts think it will take longer to recover the remaining 10 million as they are affected by Beijing’s crackdown on education, internet technology and property.

Third, the housing market remains persistently soft.

Morgan Stanley analysts previously stated that real estate sales led the recovery in the first half of 2021.

The pandemic and the measures taken after it caused problems in the Chinese economy in the 2020-2022 period. Since the restrictions were lifted in December, the economy has grown only moderately.