China's middle class tightens belt amid economic slowdown, favoring discount pleasures

China's consumer spending shows further signs of weakness, with retail sales growing only 0.2% in April 2026 compared to the previous year. This marks the slowest growth rate since December 2022, reflecting broader economic headwinds. The property sector's slump has directly impacted spending on home appliances, which fell 15.1%, and furniture, down 10.4%. The automotive sector also suffered, with sales of electric vehicles dropping 15.3% after government purchase subsidies ended.

Adding to the economic concerns, unemployment among 16- to 24-year-olds remained high at 16.3% in April. Analysts suggest this figure may be an underestimate, as it only counts those actively seeking work, and even an hour of work per week excludes individuals from the statistics. The government has set a GDP growth target of 4.5% to 5% for the year, indicating a continued structural reliance on exports to drive the economy.

Despite the overall slowdown, the situation in major cities presents a mixed picture, with some shopping malls appearing busy while others seem deserted. However, anecdotal evidence from shopkeepers suggests a lack of genuine purchasing activity, with many customers only stopping to take photos. Fierce online competition from platforms like JD.com and Taobao, offering constant discounts and rapid delivery, further pressures brick-and-mortar retailers. Nevertheless, some discount-focused franchise chains, such as Mixue (bubble tea) and Hao Xiang Lai (snacks), are thriving by offering immediate, low-cost gratification to consumers.