Consumers’ reticence in China could risk a global domino effect
The world economy has relied for years on the shopping stamina of Chinese consumers. But that spending engine seems to be sputtering.
Apple’s surprise announcement this week was just one indicator that Chinese shoppers are pulling back. Amid a tense trade war with the United States, a shaky job market and efforts by Beijing to rein in what one analyst called a decade-long “debt-fueled binge,” Chinese consumers are feeling less than confident. Property sales are down, as are auto and retail sales.
“A significant pullback could have a big impact on a world looking for engines of growth, on companies that counted on China’s continuing expansion and on global investors who have long viewed Chinese consumers as a steady source of profits.”
The Chinese premier, Li Keqiang, met today with the three largest commercial banks in the country and pushed for policies to help bolster the economy, including lower taxes and fees and more financing for small and private companies. Today, China’s central bank said that, by Jan. 25, it will scale back the amount of cash it requires lenders to hold in reserve by one percentage point.
As for Apple …
The tech giant’s problems are not limited to nervous Chinese consumers, according to the WSJ. Competitors in China, such as Huawei, are moving in on Apple’s smartphone market share. In India, a growth market, Apple is a minor player. Customers in the U.S. are keeping their phones longer.
Tom Warren at The Verge had this take:
“People are upgrading less, carrier subsidies aren’t enough, and $1,000 phones are making consumers pause and consider. Mix that in with fears of a recession, and 2019 could be challenging for Apple and many others.”
The company may pull iPhones from its German stores after Qualcomm took steps yesterday to enforce a court order last month banning the sale of certain versions of the device. The order stems from a ruling that Apple infringed on the chip-maker’s patents involving power-saving technology.
Apple’s woes were keenly felt yesterday by its third-largest shareholder, Warren Buffett’s Berkshire Hathaway. Tumbling prices for Apple and airline stocks caused more than $4 billion in value to evaporate from Mr. Buffett’s stakes in the companies, according to the FT.