Chinese seafood prices rose by an average 1.7 percent year over year in August, representing stronger price growth than the 0.9 percent price growth seen in July.
However, a continued slump in Chinese consumer confidence has been reinforced by August economic data showing the country’s consumer price index grew by 0.6 percent in the month, compared to 0.5 percent in July – much weaker price growth than that seen in major Western economies.
Chinese seafood marketing expert Fan Xubing told SeafoodSource recently he expected a drop in China’s 2024 seafood imports and warned that foreign suppliers would have to accept lower prices in order to hold market share as Chinese consumers cut back spending.
Fu Peng, the chief economist at Chinese brokerage Northeast Securities, has warned the cooling economy means China faces a “consumption downgrade” that will impact local demand for premium food and other items.
Speaking at a recent capital markets conference, Fu warned that Chinese middle-class wealth was built on the rise in price of real estate more so than earned income growth. A decline in demand for real estate is now reversing the trend, resulting in consumers seeking out cheaper goods. He used the example of a middle-class Chinese consumer who previously purchased a CNY 40 (USD 5.60, EUR 5.20) coffee.
“Now, they are buying CNY 8 [USD 1.12, EUR 1.04] coffees,” Fu said in a speech that has become a viral hit on the Chinese internet. “Consumption downgrade causes by depreciation of house values cannot be compensated for by any other income, as real estate constitutes the major portion of their wealth.”
At the industrial level, broader deflationary trends in the Chinese economy may exacerbate the downer mood among Chinese consumers. The overall CPI figure rose largely due to pork prices, up 16.1 percent year over year, and vegetable prices, which are up 21.8 percent – lifted by wetter-than-usual weather in key agricultural regions.
In contrast, China’s producer price index was down 1.8 percent in August, the sharpest decline in four months and comparing poorly with 0.8 percent in July, suggesting companies remain under pressure from weak demand – potentially a self-reinforcing vicious cycle of cost-cutting, lower wage growth, and a further weakening of consumer confidence.
