(Reuters) – Per capita spending in China fell 0.2% in real terms last year as harsh COVID curbs took their toll on consumer appetite, marking only the third such decline since records for that data began in 1980.
The drop followed a jump of 12.6% in 2021, figures from the National Bureau of Statistics (NBS) showed. That in turn was a rebound from a decline of 4% in 2020 during the initial throes of the coronavirus pandemic.
China’s economy grew just 3% in 2022, one of its weakest levels in nearly half a century with the country only deciding late in the year to abandon draconian zero-COVID policies aimed at stamping out every outbreak.
As a result, income per capita in China grew by just 2.9% in real terms, the second smallest rise since 1989 and retail sales fell 0.2%, the second worst performance since 1968.
Xu Tianchen, an economist at the Economist Intelligence Unit said, a steep drop in income growth for China’s lowest income earners was a key factor behind the weak spending data.
“Before the pandemic, the lowest income group was one of the fastest growing, but now, quite remarkably, it has become the slowest income group, dropping from 10.1% (income growth) to 5.2%.”
Unadjusted, income per capita in China grew to 36,883 yuan ($5,310) last year, while spending per capita increased to 24,538 yuan ($3,533), the NBS said.
Rural areas performed better than urbanised zones, with the incomes of rural households growing by 4.2% in real terms on the year, compared with 1.9% growth in real terms for urban residents.
Urban employment dropped by 8.4 million last year, marking its first decline since 1962.
