Business
$1.80 dinners and budget clothes? The spread of frugality is hurting China's economy
China’s 1.4 billion consumers once spent with enough abandon to help drive the global economy. Now one of the hottest topics on Chinese social media is how to save money.
“The main thing is just not to starve to death,” one video blogger advised in a post detailing how she subsisted on snack samples and free meals from temples and student canteens.
Another has gained a following in reviewing children’s meals that adults in Shanghai can eat on the cheap. “This is so economical,” she marveled over a $1.80 dinner. “They also included fried chicken.”
Other accounts tout $8 gym memberships and the merits of waiting for sales at fast-fashion clothing stores.
The tips appear to be working, as household savings have hit record highs. But experts say that’s bad news for the economy, because widespread scrimping is contributing to a dramatic slowdown in growth this year.
While the bigger factor is a worsening real estate downturn, which has eroded demand for commodities and diminished a crucial vehicle for household wealth and investment, economists say China’s economy is unlikely to recover without a rise in domestic spending.
Real estate agents wait for potential customers outside their Beijing offices in June 2014. China’s real estate downturn has eroded demand for commodities and diminished a crucial vehicle for household wealth and investment.
(Andy Wong / Associated Press)
Hou Muhan, a 28-year-old modeling agent living in Shanghai, used to borrow money from her parents every month to cover her bills.
But this year, after they started asking her to pay them back, she began tracking her expenses and became much stricter about spending at bars or trendy restaurants.
“I noticed every time I exceed my budget it’s usually because I go for drinks,” she said. “Socializing usually costs money. This is something hard to avoid in Shanghai.”
Women sit on a bench in front of a cafe in Shanghai on Oct. 12.
(Andy Wong / Associated Press)
Now she mainly cooks at home. On the rare occasions when she orders in, she divides the rice into three portions, freezing two to eat with other meals at home.
Chinese consumers are going through a “consumption downgrade,” according to an analysis of mobile payment data by Shanghai Pulse Data Technology Co.
At the beginning of last year, a typical Chinese lunch customer spent between $1.40 and $1.70 on a meal. By the end of July, that range dropped to $1 to $1.30 as many diners stopped ordering their noodles with pork in favor of egg or vegetables.
Since her parents began asking her to repay the loans they had been giving her to help with her bills, Hou Muhan of Shanghai became much stricter on her spending and now mainly cooks at home.
(Courtesy of Hou Muhan )
As housing and stock prices have fallen, consumers in 25 out of 32 Chinese cities spent less than average in the first half of the year, according to the report.
Over the last few years, the housing downturn, record youth unemployment and layoffs in tech and other industries have compounded economic pessimism. A highly anticipated rebound in consumer spending after the pandemic never materialized.
Luxury brands are also falling out of favor in China, as shoppers have pulled back on big-ticket purchases. French conglomerate LVMH, an industry bellwether and the owner of the Louis Vuitton and Dior brands, reported a 16% slide in quarterly revenue in Asia excluding Japan last week, as its chief financial officer noted consumer confidence in China had slumped to an all-time low.
Customers attend a Louis Vuitton fashion show in April in Shanghai. The brand’s owner, French conglomerate LVMH, reported a 16% slide in quarterly revenue in Asia excluding Japan last week.
(Andy Wong / Associated Press)
Without faith in their economic futures, consumers are unlikely to let go of the frugality they have adopted in recent years.
“Whenever there is uncertainty about the economy, households save more,” said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, a French investment bank. “Disposable income is not growing. People are losing purchasing power.”
China has relied heavily on infrastructure, manufacturing and exports to drive its economic growth over the last decade. But economists said that as those sectors have matured they have lost some of their power to fuel the economy.
In an interview with the state-run China Daily, Chen Wenling, chief economist for Beijing-based think tank China Center for International Economic Exchanges, said consumption probably would become an engine for faster economic growth in the long run than industrial investment or exports.
Pedestrians pass an electronic screen displaying prices at the Hong Kong Stock Exchange in June 2023.
(Louise Delmotte / Associated Press)
She called on the government to find ways to create more jobs and bolster household income.
It’s unclear what such efforts might entail. Over the last month, officials have announced a raft of incremental measures to lift the economy, including cutting interest rates and financial support for the property and stock markets.
But Ernan Cui, a consumer analyst at Gavekal Dragonomics, wrote in a September report that Chinese leaders are unlikely to roll out actions to directly stimulate consumer spending, such as distributing cash to households.
Cui said that disinclination is partly because high existing household savings would necessitate a cash infusion of hundreds of billions of dollars to have a notable effect. Chinese leaders are also reluctant to exacerbate income inequality or discourage people from looking for work, she said.
Amora Liu said she worked hard to save at least $225 of the $1,000 she earned each month from her job as a legal consultant at a courier company.
“If I spend it all, then I really have no sense of security,” said Liu, 25, who posts video diaries of her budgeting on social media.
Amora Liu left her job in Shanghai this year to move in with her parents in Changsha, China, where her rent and meals are free.
(Courtesy of Amora Liu)
In May, she moved from the city center to the suburbs more than an hour away, cutting her rent in half. She also started cooking for herself every day instead of going to restaurants.
She managed to save up about $4,200 before she took an even more extreme step: quitting her job and moving back in with her parents in Changsha, the capital of Hunan province.
She has used her savings to travel a little, but living at home has cut her consumption and spending dramatically.
Her video blog details a new budget that would make the economists cringe.
Rent? Free.
Lunch and dinner? Free.
Times special correspondent Xin-yun Wu in Taipei contributed to this report.
Business
Nike to Cut 1,400 Jobs as Part of Its Turnaround Plan
Nike is cutting about 1,400 jobs in its operations division, mostly from its technology department, the company said Thursday.
In a note to employees, Venkatesh Alagirisamy, the chief operating officer of Nike, said that management was nearly done reorganizing the business for its turnaround plan, and that the goal was to operate with “more speed, simplicity and precision.”
“This is not a new direction,” Mr. Alagirisamy told employees. “It is the next phase of the work already underway.”
Nike, the world’s largest sportswear company, is trying to recover after missteps led to a prolonged sales slump, in which the brand leaned into lifestyle products and away from performance shoes and apparel. Elliott Hill, the chief executive, has worked to realign the company around sports and speed up product development to create more breakthrough innovations.
In March, Nike told investors that it expected sales to fall this year, with growth in North America offset by poor performance in Asia, where the brand is struggling to rejuvenate sales in China. Executives said at the time that more volatility brought on by the war in the Middle East and rising oil prices might continue to affect its business.
The reorganization has involved cuts across many parts of the organization, including at its headquarters in Beaverton, Ore. Nike slashed some corporate staff last year and eliminated nearly 800 jobs at distribution centers in January.
“You never want to have to go through any sort of layoffs, but to re-center the company, we’re doing some of that,” Mr. Hill said in an interview earlier this year.
Mr. Alagirisamy told employees that Nike was reshaping its technology team and centering employees at its headquarters and a tech center in Bengaluru, India. The layoffs will affect workers across North America, Europe and Asia.
The cuts will also affect staffing in Nike’s factories for Air, the company’s proprietary cushioning system. Employees who work on the supply chain for raw materials will also experience changes as staff is integrated into footwear and apparel teams.
Nike’s Converse brand, which has struggled for years to revive sales, will move some of its engineering resources closer to the factories they support, the company said.
Mr. Alagirisamy said the moves were necessary to optimize Nike’s supply chain, deploy technology faster and bolster relationships with suppliers.
Business
Senate committee kills bill mandating insurance coverage for wildfire safe homes
A bill that would have required insurers to offer coverage to homeowners who take steps to reduce wildfire risk on their property died in the Legislature.
The Senate Insurance Committee on Monday voted down the measure, SB 1076, one of the most ambitious bills spurred by the devastating January 2025 wildfires.
The vote came despite fire victims and others rallying at the state Capitol in support of the measure, authored by state Sen. Sasha Renée Pérez (D-Pasadena), whose district includes the Eaton fire zone.
The Insurance Coverage for Fire-Safe Homes Act originally would have required insurers to offer and renew coverage for any home that meets wildfire-safety standards adopted by the insurance commissioner starting Jan. 1, 2028.
It also threatened insurers with a five-year ban from the sale of home or auto insurance if they did not comply, though it allowed for exceptions.
However, faced with strong opposition from the insurance industry, Pérez had agreed to amend the bill so it would have established community-wide pilot projects across the state to better understand the most effective way to limit property and insurance losses from wildfires.
Insurers would have had to offer four years of coverage to homeowners in successful pilot projects.
Denni Ritter, a vice president of the American Property Casualty Insurance Assn., told the committee that her trade group opposed the bill.
“While we appreciate the intent behind those conversations, those concepts do not remove our opposition, because they retain the same core flaw — substituting underwriting judgment and solvency safeguards with a statutory mandate to accept risk,” she said.
In voting against the bill Sen. Laura Richardson, (D-San Pedro), said: “Last I heard, in the United States, we don’t require any company to do anything. That’s the difference between capitalism and communism, frankly.”
The remarks against the measure prompted committee Chair Sen. Steve Padilla, (D-Chula Vista), to chastise committee members in opposition.
“I’m a little perturbed, and I’m a little disappointed, because you have someone who is trying to work with industry, who is trying to get facts and data,” he said.
Monday’s vote was the fourth time a bill that would have required insurers to offer coverage to so-called “fire hardened” homes failed in the Legislature since 2020, according to an analysis by insurance committee staff.
Fire hardening includes measures such as cutting back brush, installing fire resistant roofs and closing eaves to resist fire embers.
Pérez’s legislation was thought to have a better chance of passage because it followed the most catastrophic wildfires in U.S. history, which damaged or destroyed more than 18,000 structures and killed 31 people.
The bill was co-sponsored by the Los Angeles advocacy group Consumer Watchdog and Every Fire Survivor’s Network, a community group founded in Altadena after the fires formerly called the Eaton Fire Survivors Network.
But it also had broad support from groups such as the California Apartment Association, the California Nurses Association and California Environmental Voters.
Leading up to the fires, many insurers, citing heightened fire risk, had dropped policyholders in fire-prone neighorhoods. That forced them onto the California FAIR Plan, the state’s insurer of last resort, which offers limited but costly policies.
A Times analysis found that that in the Palisades and Eaton fire zones, the FAIR Plan’s rolls from 2020 to 2024 nearly doubled from 14,272 to 28,440. Mandating coverage has been seen as a way of reducing FAIR Plan enrollment.
“I’m disappointed this bill died in committee. Fire survivors deserved better,” Pérez said in a statement .
Also failing Monday in the committee was SB 982, a bill authored by Sen. Scott Wiener, (D-San Francisco). It would have authorized California’s attorney general to sue fossil fuel companies to recover losses from climate-induced disasters. It was opposed by the oil and gas industry.
Passing the committee were two other Pérez bills. SB 877 requires insurers to provide more transparency in the claims process. SB 878 imposes a penalty on insurers who don’t make claims payments on time.
Another bill, SB 1301, authored by insurance commissioner candidate Sen. Ben Allen, (D-Pacific Palisades), also passed. It protects policyholders from unexplained and abrupt policy non-renewals.
Business
How We Cover the White House Correspondents’ Dinner
Times Insider explains who we are and what we do, and delivers behind-the-scenes insights into how our journalism comes together.
Politicians in Washington and the reporters who cover them have an often adversarial relationship.
But on the last Saturday in April, they gather for an irreverent celebration of press freedom and the First Amendment at the Washington Hilton Hotel: The White House Correspondents’ Association dinner.
Hosted by the association, an organization that helps ensure access for media outlets covering the presidency, the dinner attracts Hollywood stars; politicians from both parties; and representatives of more than 100 networks, newspapers, magazines and wire services.
While The Times will have two reporters in the ballroom covering the event, the company no longer buys seats at the party, said Richard W. Stevenson, the Washington bureau chief. The decision goes back almost two decades; the last dinner The Times attended as an organization was in 2007.
“We made a judgment back then that the event had become too celebrity-focused and was undercutting our need to demonstrate to readers that we always seek to maintain a proper distance from the people we cover, many of whom attend as guests,” he said.
It’s a decision, he added, that “we have stuck by through both Republican and Democratic administrations, although we support the work of the White House Correspondents’ Association.”
Susan Wessling, The Times’s Standards editor, said the policy is a product of the organization’s desire to maintain editorial independence.
“We don’t want to leave readers with any questions about our independence and credibility by seeming to be overly friendly with people whose words and actions we need to report on,” she said.
The celebrity mentalist Oz Pearlman is headlining the evening, in lieu of the usual comedy set by the likes of Stephen Colbert and Hasan Minhaj, but all eyes will be on President Trump, who will make his first appearance at the dinner as president.
Mr. Trump has boycotted the event since 2011, when he was the butt of punchlines delivered by President Barack Obama and the talk show host Seth Meyers mocking his hair, his reality TV show and his preoccupation with the “birther” movement.
Last month, though, Mr. Trump, who has a contentious relationship with the media, announced his intention to attend this year’s dinner, where he will speak to a room full of the same reporters he often derides as “enemies of the people.”
Times reporters will be there to document the highs, the lows and the reactions in the room. A reporter for the Styles desk has also been assigned to cover the robust roster of after-parties around Washington.
Some off-duty reporters from The Times will also be present at this late-night circuit, though everyone remains cognizant of their roles, said Patrick Healy, The Times’s assistant managing editor for Standards and Trust.
“If they’re reporting, there’s a notebook or recorder out as usual,” he said. “If they’re not, they’re pros who know they’re always identifiable as Times journalists.”
For most of The Times’s reporters and editors, though, the evening will be experienced from home.
“The rest of us will be able to follow the coverage,” Mr. Stevenson said, “without having to don our tuxes or gowns.”
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