In 2024, the iconic high-end French restaurant L’Atelier 18 in Shanghai, known for its average per capita spending of 1580 yuan and considered a landmark in Shanghai’s high-end dining scene, unexpectedly closed its doors. According to the dining industry platform Red Meal Network, in the past five years, there were over 2700 high-end dining establishments in Shanghai with an average spending of over 500 yuan per person. However, by July this year, over half of these establishments had closed down, resulting in a decrease of more than 1400 outlets.
The entire high-end dining industry in China is facing similar challenges. To survive, some high-end restaurants have introduced “budget meals” while others have launched more affordable sub-brands.
The economic policies of the Chinese authorities, which favor the Party’s interests over the people’s, have stifled the private economy, leading to a shrinking wealth among Chinese people, the gradual disappearance of the middle class, and a downturn in high-end consumerism in China.
According to Bloomberg, in the first half of this year, the growth rate of the catering industry in China slowed to below 8% for the first time since 2010. This trend has also extended to industries like clothing, cosmetics, and jewelry.
Research from UBS shows that luxury sales in mainland China dropped by around 10% in the first seven months of this year. Luxury brands may reconsider the pace of opening new stores in mainland China.
Data from Luxurynsight indicates that in 2024, the average price reduction of Italian luxury fashion brand Versace and British luxury fashion brand Burberry across all distribution channels in China will reach 50%, with some even exceeding 50%.
Italian luxury brand Gucci reported a 20% decline in sales in China compared to the previous year.
In July, Marc Jacobs offered discounts of over 50% on handbags, clothing, and shoes on the luxury e-commerce platform Tmall operated by Alibaba. Bottega Veneta provided a 24-month interest-free loan for purchasing bags.
According to Tianfeng Securities’ calculations, consumer data in Shanghai, Beijing, Guangzhou, and Shenzhen plunged drastically in June, with the year-on-year growth rate of social retail sales amounting to -9.4%, -6.3%, -9.3%, and -2.2% respectively.
Economist Huang Dawei mentioned that in the past, high-end consumption in China mainly catered to three groups: officials and elite consumers exchanging gifts, personal entrepreneurs, and the middle class.
“With the recent reduction in personal income tax by 5.7%, one can imagine that white-collar workers with better jobs might be facing unemployment or salary cuts,” Wei Zhen, a former mainland media person, shared with Epoch Times.
The decline in salary income in China, which dropped by 1.3% in the fourth quarter of 2023 and averaged 17.5% less in bonuses, indicates a concerning trend in the economy.
As the wealth of Chinese people shrinks and the middle class gradually diminishes, what does this signify for the Chinese Communist government?
Huang Dawei believes that according to a United Nations report, the middle class is the cornerstone of social stability. When the middle class thrives, it fosters a more robust legal society, efficient in education, healthcare, housing, social progress, and technology.
He emphasized that the disappearance of the middle class in China would lead to societal imbalance, creating a pyramid structure heavily tilted towards poverty with a limited number of beneficiaries at the top. This would result in severe income disparity, promoting a Darwinist society where violence thrives, legal governance falters, and social instability ensues.
Wei Zhen added that countries like Taiwan and South Korea witnessed societal transformations during times of economic growth and middle-class expansion. However, for communist China, a widespread humanitarian disaster might be necessary for any potential transformation to occur.
A recent empirical study conducted by the Center for Strategic and International Studies (CSIS) revealed that there has been a significant shift in the mindset of the Chinese people. They are increasingly questioning the communist system and have lost faith in changing their destiny through their own abilities and efforts.
People are describing the current state of the Chinese communist regime as being in a countdown to regime change, where there is a belief that no one can reverse the course of history during this “wasted time of history.”