Economy

The show goes on

What CCTV’s Gala says about China’s economy

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Dancers at this year’s Gala

China’s state broadcaster CCTV has shown the Spring Festival Gala every Chinese New Year since 1983. The show is easily the most watched TV programme in history, according to Guinness World Records.

Creative ideas and interplay with the audience are said to be two important parts of the Gala’s tradition. For instance, during the inaugural show, producers installed four telephone lines so that viewers could call in with their seasonal song requests. The four lines were soon jammed in spite of the fact that telephones remained a household rarity for much of the 1980s.

For years the commercial sponsorships of the Gala have been watched closely for clues on the companies in the ascendancy in the Chinese economy. In 2010, for example, Tencent scored a marketing coup over archrival Alibaba by being named as CCTV’s “new media partner” for the show. The Rmb53 million ($8.33 million) deal gave such a boost to the internet firm’s digital payments arm Tencent Pay that Alibaba was forced to splash out Rmb269 million for similar privileges in 2016, handing out additionally Rmb800 million in ‘red packets’ (or digital cash) to lure users back to Alipay.

By 2020, a similar deal between CCTV and short-video platform Kuaishou incorporated total spending by Kuaishou of Rmb2 billion, Caixin Weekly reported.

It was JD.com’s turn in the spotlight during the most recent Year of Tiger celebrations as the e-commerce giant was announced as the Gala’s exclusive ‘partner of interactivity’ for last week’s show. What JD.com paid for such an honour was undisclosed, but it did set aside Rmb1.5 billion for ‘red packet’ promotions and gifts for online shoppers. (JD.com boss Liu Qiangdong also made headlines by announcing that he will be donating shares worth $2 billion to charity.)

According to Cailian, a financial portal operated by the Shanghai United Media Group, ‘red packet’ cash handed out by Chinese internet firms at last year’s Spring Festival reached Rmb18 billion. However, enthusiasm for shopping online with this cash has been waning, Cailian reports. The online platforms have run out of new ideas for generating extra traffic, it claims, following eight years of “red packet war”.

The same might be said of the CCTV Gala itself, which has been heading down creative cul-de-sacs as it moves towards its 40th anniversary next year. But might that malaise reflect more broadly on the Chinese economy as well, after more than four decades of robust growth?

Last year the State Council set a growth target of “above 6%” for the domestic economy that was comfortably surpassed: Chinese GDP grew 8.1% over the 12 months, the quickest pace since 2010. Robust exports to China’s main markets helped (see WiC563).

The Chinese government is yet to announce a growth target for 2022 but economists generally believe the country is heading into what is often being termed as the “5.0 era”, i.e. a period in which GDP growth will be less than 6%.

According to economists polled by Reuters, China’s economy is likely grow 5.5% this year, for instance, although others have been less certain about the outlook. The International Monetary Fund put out projections that the economy would grow 5.6% in 2022 when it gave its verdict at the end of last year. However, in its latest World Economic Report, the IMF has revised that outlook lower to 4.8% – citing the drag of ‘zero Covid’ policies on China’s economic performance.

Financial stress from an ailing real estate sector was given by the IMF as another reason for the growth slowdown.

Indeed, the Spring Festival is traditionally a prime time of year for home sales. Yet according to Cailian, property transactions in most major cities have slumped to a five-year low this month (Shanghai was an exception). Additionally, Caixin reported that total sales across the country’s top 100 developers fell 39.6% in value in January versus the same month last year (and were 43% below the average month in 2021).

No wonder Chinese newspapers have been reporting that policymakers are on high alert and that some local governments may soon come to the rescue of the real estate sector with a new round of policies that loosen some of the previous restrictions on homebuying…


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