The international stores are starkly empty on a plush floor selling designer shoes and bags in a mall for the most expensive shopping in Beijing — the capital of the world’s second-largest luxury goods market.
This week, China’s government-run media flashed a survey that said Chinese multi-millionaires would increase by six per cent to 3,20,000 later this year. But they don’t seem to be buying. In a store selling designer shoes made by a British luxury brand, the staff told this correspondent that sales had dropped from 10 per week last year to less than half. In a designer handbag store, they blamed the economic crisis for a 30 per cent drop in sales.
But China, which holds the world’s richest foreign exchange reserves of nearly two trillion yuan, is still shopping abroad.
Among the flurry of muscle-flexing announcements from Beijing in the run-up to this week’s Group of 20 Summit in London, the State-run media announced that an official trade delegation would head to the US this month.
The 10-day trade tour of Washington, San Francisco and Chicago will come soon after the government spent over 13 billion dollars in Europe in February, signing deals for strategic technology and even Mercedes cars. Similar shopping outings are planned this year in Africa and Japan, which China aims to overtake as the second-largest economy.
The shopping missions ‘set a good example for other countries,’ the China Daily quoted Feng Lei, a researcher with the State think tank, the Chinese Academy of Social Sciences, as saying. “Buying trips by China will help restore confidence of enterprises and consumers both in China and other countries,” he said.
China’s splurging is strategically timed to strengthen its say at the G20. Just days before the meeting of world leaders, Beijing’s central bank governor famously floated a proposal calling for an alternative global reserve currency to replace the weakening dollar. Premier Wen Jiabao has openly said he is worried about the safety of China’s investments in the US.
But while Beijing’s global influence expands during the economic crisis, the Chinese economy needs its own domestic consumers — and millionaires — to spend and help the economy grow. The survey of multi-millionaires found that China’s richest reside not in Shanghai or Beijing but in the southern export powerhouse of Guangdong where thousands of factories have shutdown and officials are on alert for labour unrest.