Chinese shoppers look at the iPhones on display at the Apple Store in Shanghai. Photo: AFP
Apple stores sprouted up across China's major cities as iPhones sales in the world's second-largest economy. Photo: AFP

Shopping is a national pastime in China. Online sales are predicted to hit US$1.53 trillion this year compared with $1.14 trillion in 2017, the Ministry of Commerce reported.

Yet overall, the shop-till-you-drop approach is quite simply dropping off as the economy cools.

In the third quarter, GDP growth came in at a healthy 6.5% but still fell to levels not seen since the 2009 Great Recession.

Earlier this week, the service sector also showed signs of distress with the pace of growth decelerating while the latest data on consumer confidence dipped, CEIC, a global market intelligence firm, reported.

On the positive side, retail sales jumped by 9.3% in the first three quarters compared with the same period in 2017, according to the National Bureau of Statistics. But those figures looked disappointing when put alongside last year’s overall growth of 10.4%.

Still, one growing trend that emerged last weekend was ballooning consumer debt.

Short-term loans

Figures in the 2018 Financial Stability Report, released by the People’s Bank of China, showed that outstanding short-term consumer loans surged from 19.9% in January 2017 to 40.9% in October 2017.

During the same period, the growth rate for mid- and long-term consumer loans dropped from around 35% to less than 25%, the PBOC study revealed.

“In recent years, the rising cost of purchasing property has dragged on the consumption power of some residents, making them turn to short-term consumer loans to maintain spending,” the report said.

Indeed, paying off those loans is one reason consumer confidence has taken a hit.

Already former PBOC governor Zhou Xiaochuan “has warned about the rapid growth in consumer credit and the consequences of encouraging young people to buy things with money they don’t have,” the Chinese website Caixin reported on Tuesday.

Maybe it is time for cold-turkey rehab for the shopaholics of the world’s second-largest economy.