China’s real economy is facing continued contraction, with consumers reducing their outings, malls and stores becoming deserted, and e-commerce penetration reaching new highs. People in many places have reported that malls are being transformed into sports facilities or warehouses, and pharmacies are selling daily necessities. Some joke, “Rather than leaving them empty, why not turn them into graveyards?”
In recent years, the severe downturn of China’s economy has significantly impacted business operations, leading to a rise in unemployment and resulting in weak consumer spending. The retail industry is in a slump, with a wave of closures happening. A resident in Xiamen, Fujian, stated on social media that they no longer go to supermarkets, even buying salt online as it is half the price compared to offline stores. A clothing store owner mentioned that due to high rent and labor costs, they operate at a loss every day, ultimately having to close down.
On social media platform Douyin, a video captured an individual saying, “The grand shopping mall lobby, spiral elevators, are now empty, turned into badminton courts, just look at everyone playing there.” A netizen in Fuzhou commented in the forum, “In our mall here, they turned the atrium into a basketball court.”
A pharmacy worker in Quanzhou named Wang said they are also experiencing a similar situation locally. She mentioned, “There are no customers now. Our pharmacy only serves a few customers a day, and we have only two people working daily. I don’t go to the mall anymore; if I need to buy something, I look online.”
Wang expressed that while the government opposes the idea of people “lying flat,” it is more of a result of circumstance rather than choice. She said, “The people don’t want to lie flat; they have no choice. Everyone wants a job but can’t find one. The government doesn’t provide welfare; everything costs money, so people are reducing their consumption.”
In cities like Shanghai, Chongqing, Qingdao, and Changsha, some old shopping malls have been repurposed into sports centers, community warehouses, or pet parks. In Changsha, Chen Gang, engaged in foreign trade processing of lighting fixtures, told reporters, “I don’t know what’s happened in recent years; the economy suddenly took a turn for the worse. When I went to a barbecue restaurant at night, it used to have long lines, but now, it’s empty.”
Chen also highlighted the increasing struggle for physical stores, citing, “Take restaurants, for example; previously, a Beijing roast duck would sell for around 100 yuan, now it’s 40 yuan, but the portion remains the same. It would be strange if restaurants didn’t close down.”
According to incomplete statistics from Yi Lan Business, in 2024, at least over 12,000 stores in China announced closures, affecting nearly a thousand brands. Sectors such as cultural retail, clothing, dining, and education and training have been impacted. The data shows approximately 782 supermarkets closed, 41 department stores and shopping centers shuttered, over 6,000 dining establishments shut down, over 3,000 clothing stores closed, and over 3,000 other types of establishments ceased operation.
Insiders indicate that these statistics do not include individual businesses not officially registered, suggesting that the actual scale of store closures may be double what is reported.
Mr. Yang, a market researcher at Wuhan University, stated, “Whether it’s first-tier cities like Beijing, Shanghai, Shenzhen or second-tier cities like Nanjing, Wuhan, we are seeing a decline in residents’ purchasing power, resulting in stagnant goods sales which caused the closure of physical stores. The government is not oblivious; they simply have no solution.”
He believes that physical stores in China are gradually disappearing and will eventually be replaced by online stores, leading to higher living costs for residents.
He explained, “The disappearance of physical stores is another kind of disaster for the people. Once a few major online shopping platforms monopolize the market, goods will be monopolized, leading to inevitable price increases.”
At the end of 2022, following the “blank slate movement,” China was forced to end its “zero-COVID” policy, leading to a brief economic rebound. The government touted the upcoming “retaliatory consumption,” but market confidence rapidly fell after two quarters. The accumulation of debt, business closures, and a wave of unemployment during lockdowns in various regions dampened residents’ willingness to spend.
Mr. Yao, a consultant at Wangjing Mall in Chaoyang District, Beijing, recalled, “Many malls were just opening, then shutting down. Shop owners opened with debts and two months later had to clear stock. Now, due to the lack of customers, dozens of physical stores have closed, with most being clothing stores.”
Yao noted that despite falling lease costs, they still had no takers. “Before the pandemic, there were many foreigners living here, mostly Koreans. They have all returned to their countries. All the coffee shops here have closed down.”
According to data from the National Bureau of Statistics of the Communist Party of China, the total retail sales of consumer goods in 2023 only increased by 4.6%, significantly lower than pre-pandemic levels. In the second half of 2023, real estate and local financial conditions worsened, affecting industries like retail, dining, education, and entertainment. National retail sales saw a 3.5% year-on-year increase in 2024, significantly slower than before the pandemic. From January to June 2025, retail sales saw a 5.0% year-on-year growth.
Regarding the situation where retail sales are increasing while physical stores continue to close, Beijing economist Mr. Qian pointed out that although statistics show positive growth in consumption, the growth rate has long been lower than residents’ income and inflation rates, indicating weakened purchasing power. High vacancy rates in many commercial areas persist, demonstrating no signs of recovery in physical retail.
He stated, “The growth in total retail sales mainly exists in digitals, not reflecting the actual commercial vitality of the street blocks. E-commerce monopolies, rising costs, and low resident confidence are accelerating the disappearance of physical stores beneath the appearance of total sales growth.”
A department supervisor at a shopping center in Shanghai, Ms. Shao, mentioned, “Previously on weekends, we could have over ten thousand customers, but now not even one floor is full.” She expressed helplessness, stating that after brands shut down, new tenants are unwilling to move in, leading to rental challenges.
Many scholars point out that another significant blow to physical store operations comes from financial contraction. Starting from 2023, banks in many regions have tightened loans to micro-enterprises, with a decrease in mortgage rates but a rise in credit loan costs.
Mr. Zeng, a restaurant owner on Baohua Road, Liwan District, Guangzhou, shared how he applied for a 300,000 yuan working capital loan from a bank, only to be asked for a property mortgage. He commented, “We don’t own any property; we rent everything. Who’s buying property now?”
According to publicly available data from the China Banking and Insurance Regulatory Commission and the Ministry of Commerce, the average interest rate for new inclusive loans to micro-enterprises in 2024 was around 4.4%, slightly lower than before the pandemic, but the difficulty in financing did not ease.
As reported by Winshang Net and the China Hotel Association, approximately 3 million dining establishments closed in 2024, surpassing the scale seen during the pandemic year. Industry insiders mentioned that while rent and labor costs remained high, consumer demand halved, leading to businesses unable to sustain themselves on a monthly basis.
In recent years, even foreign brands have been shrinking their physical presence in China. It was reported that the parent company of Zara, Inditex, reduced its number of stores in China from around 570 in 2019 to approximately 192 by early 2024, mostly focusing on core cities like Beijing, Shanghai, and Guangzhou. MUJI also closed several locations across multiple cities, including some second-tier city shopping malls.
Industry professionals noted that the operational strategy of foreign brands in China is shifting from “expansion” to “tiered management,” preserving only profitable stores in core cities. A retail consultant working in Shanghai mentioned, “Foreign brands were the first to withdraw, but even domestic brands are struggling. Previously, they could rely on franchise stores for sales, but now the franchise model is contracting.”
According to data released by the China Chain Store Association’s Top 100 Enterprises in 2024, the total number of stores for these 100 brands reached approximately 257,200, a 13.5% increase year-on-year. However, the association did not disclose the overall percentage decrease in nationwide franchise stores since 2019. Observers within the industry state that while the number of top brand stores is increasing, the withdrawal of small and medium franchise stores in second and third-tier cities is attracting widespread attention.
The rising penetration rate of online shopping is reshaping the retail industry structure. Official figures from the Communist Party of China show that in 2024, the country’s online retail sales of physical goods reached around 13.08 trillion yuan, accounting for approximately 26.8% of total retail sales of consumer goods. While online sales continue to grow, analysts point out that this trend has not translated into improved employment or income for physical stores.
A sociologist at Peking University, who chose to remain anonymous, mentioned, “The prosperity of e-commerce platforms is concentrated. While online transaction volumes are increasing, economic activities in urban blocks and community businesses are declining.”
He explained, “The rapid development of e-commerce and livestreaming economies has indeed boosted total retail sales, but consumption remains concentrated on a few platforms and major sellers. Traffic and funds often only flow to the top 10% of sellers, while the remaining 90% of businesses can barely sustain or are forced to exit.” This structural concentration has led to the erosion of local urban commercial ecosystems, with traditional street vendors, mom-and-pop shops, and small brands “losing their space to exist.”
Mr. Lu, an online shop owner in Qingdao, Shandong, expressed that platforms are also facing challenges: “Previously, platforms charged a 5% commission, now they ask for 10% to 15%. Although sales seem to increase, profits are thinner.” These changes have placed physical and online operators in similar predicaments.
Reports indicate that during the recent “Golden Week” holiday, the national outbound travel reached a record high of 290 million people, but the average per capita spending was only about 130 RMB, far lower than pre-pandemic levels. Many scenic spots experienced overcrowding but low spending, leading internet users to joke, “People everywhere, wallets as thin as water.”
Recently, there has been widespread sharing of “saving strategies” on social media platforms: how to use the subway for transportation, bring food into parks, or make day trips without staying overnight. Many tourists mentioned, “The atmosphere was lively, but expenses were low.” Chinese economists pointed out that this reflects a deepening frugal mindset among residents, where the increase in travel numbers does not signify economic recovery but rather a low-cost social activity.
According to data from the National Bureau of Statistics, in 2024, the average annual food, tobacco, and alcohol consumption spending per capita accounted for 29.8% of per capita total consumption expenditure; this percentage increased to approximately 30.4% in the first half of 2025.
Scholar Wu Hao from Hangzhou emphasized the rising proportion of essential spending and the contraction of physical retail businesses have a direct correlation.
The consumption structure of Chinese households has significantly changed in recent years: essential expenditures such as food, housing, and basic necessities are increasing as optional spending on clothing, dining, and entertainment declines. This trend has placed most physical stores, especially those dependent on “non-essential consumption,” like clothing, leisure, and department stores, in a continuing state of market contraction.
Wu noted that e-commerce platforms and large supermarkets attracted the remaining consumer demand by leveraging scale and price advantages, leading to the early elimination of small businesses and neighborhood retail due to lack of foot traffic and cost support. He remarked, “Under inflation, unemployment, and mortgage pressures, residents are becoming more conservative in their spending. They try to save wherever they can and prefer online shopping over physical stores. Offline consumption is no longer a habit but a risk.”
As China’s economy declines, the job market worsens. A report by the People’s Bank of China revealed that the household savings rate in China hit a new ten-year high in 2024, while the share of consumption expenditure continued to decrease. Economists view this as a form of “defensive saving,” indicating people’s lack of confidence in the future.
Now, many physical store owners in China express that they have no plans for expansion. A stationery store owner in Jiangsu posted on social media, “Survival is already good.” He consolidated his three stores into one, focusing on school supplies and express services. Another internet user commented, “Policies come quickly and end quickly. Night markets were allowed to operate for a few days, and then not anymore.”
Industry experts widely believe that the mass closure of stores exemplifies a redefinition of the market structure, with both foreign and domestic brands seeing a diminishing physical development space in China. Some commentators suggest that the disappearance of physical stores in China is increasingly likely, rather than a far-fetched scenario.