Food for thought puts Beijing in a ‘fiscal funk’
China’s hotel industry reportedly sells ‘gourmet dishes’ on the streets amid consumer spending squeeze
These are crazy times for China. As the economy sinks into a fiscal funk, “hotel hawking” has become all the rage to cope with dwindling consumer demand. Even the playgrounds of the rich are suffering.
Many have been reduced to selling their “gourmet dishes” on the streets to “make up” for falling revenue amid a spending squeeze.
“It’s not that people will come just because you lower prices or offer discounts – they simply don’t come at all,” Anwen Xu, the sales director at Beiyuan Grand Hotel in Beijing, told Reuters news agency last week.
Chinese social media sites have reported at least 15 luxury hotels hawking their food outside in a move to cook up new revenue streams. It comes as cuts to corporate and official travel budgets bite and banquet reservations shrivel.
Meager menu:
- A crackdown on corporate and government travel budgets has taken its toll.
- Banquet reservations have shrunk, hitting the bottom line for high-end hotels.
Output slump illustrates the depth of the nation’s building slowdown.
Bloomberg News
Delve deeper: Analysts have pointed out that “hotel hawkers” are another sign of deflationary pressures becoming entrenched in the world’s second-largest economy, according to the Reuters report.
Between the lines: “Domestic demand remains weak and prices are still falling,” Yang Yao, the dean of DAFI at the Shanghai University of Finance and Economics, and a visiting professor at Peking University, wrote in a commentary for East Asia Forum.
Big picture: China’s growth is still geared to manufacturing and exports rather than consumption. In turn, large-scale infrastructure projects and a real estate crash have become casualties of a looming debt crisis.
Bottom line: “Few commodities tell the story of China’s 21st-century economy better than humble cement, and its output slump illustrates the depth of the nation’s building slowdown after the frenzy of the previous decade,” Bloomberg News reported today.
China Factor comment: As we have stressed, China’s economy is like a fentanyl junkie hooked on “overinvestment, overcapacity, and overproduction.” Ballooning public debt walks hand in hand with a rapid decline in household wealth. Deflation is rife.