Economy

Carpe diem in Chengdu

Consumers boost spending after last year’s earthquake

Encouraging people to ‘live every day as if it’s their last’, is not part of the government’s current stimulus package. But it might be a tactic worth considering if domestic consumption figures coming out of the earthquake-stricken province ofSichuan are anything to go by.

The damage from last year’s earthquake, as well as the less immediate impact of the global financial crisis, hit the province hard in the aftermath of the quake. But people in Sichuan have begun to spend like there’s no tomorrow. After a sharp slowdown following the earthquake in May, year-on-year retail sales growth rebounded to 22.3% in October. According to statistics published by the provincial government, domestic consumption in the province also boomed during the recent Lunar New Year festivities. In Chengdu, the provincial capital, total retail sales at six of the largest department stores have risen by an unprecedented 39% compared to the same period last year.

So what’s going on? Well, as in many cities around the world,it’s worth asking the local taxi drivers. The China Daily did just that, and the response was a philosophical one: “Now people are willing to enjoy what they have instead of saving for the future. An earthquake shows you that the future can be snatched away from you in a blink.”

It is this carpe diem (‘seize the day’) mentality that is driving the urge to splurge. Such an attitude is a departure from the norm. The Chinese typically save up to 40% of their income.

Given the Chinese’ love for food, what better way to spend one’s money than on dining out? According to Chengdu Evening News, restaurants were bustling during the Chinese New Year holiday, and made record profits.

Our philosophical taxi driver also reckons that car sales in Sichuan are on the up, with dealers actually running out of new vehicles in the city of Dujiangyan. This observation is confirmed by Zhou Jinhui, a sales manager at Jianguo Group in Chengdu, who says that new car sales at his dealership were up by 50% in January. Other dealers also posted a more modest 30% increase for the month.

Home sales in Sichuan are also well above the national average. The latest home sales figures published by the National Bureau of Statistics show that Chengdu (and similarly quake-hit Chongqing) recorded the highest number of housing transactions in the country. According to the Chengdu Evening News, in the first week after the Lunar New Year, the total floor area purchased was up 35% on the same period in 2008.

The need to rebuild homes, as well as lives, is obviously a factor behind the economic data. Sichuan is also earmarked for a sizeable slew of government stimulus spend.

But not all redevelopment efforts are being welcomed. Baoshan Group, a Chinese construction giant, has caused controversy amongst Chinese netizens with a 6.6-hectare entertainment park in Pengzhou, a city that was badly struck by the quake. Critics see it as tasteless, one even asking, “How would the Americans react if someone built an amusement park above Ground Zero?”


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