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U.S. and Chinese officials are due to meet in Switzerland this weekend for their first talks on President Trump's sweeping tariffs. At home, China's government is hoping consumer spending will rev up economic growth and offset the tariffs. But as NPR's Anthony Kuhn reports from Beijing, consumers have instead been tightening their belts.
ANTHONY KUHN, BYLINE: For more than a decade, Shanghai resident Jasmin Zhan earned a Chinese middle-class salary of around $34,000 a year working as a landscape designer. But about three years ago, China's economic landscape turned bleak, especially the real estate sector, which made up most of Jan's clients. First, she took a 40% pay cut, then she was laid off. Now, she says, she thinks before she spends.
JASMIN ZHAN: (Through interpreter) Now I think, how long can I use this thing? Is there anything at home that I can substitute for it? Do I really have to buy it?
KUHN: Instead of getting a new cell phone, she just gets a new battery for her old one. She says her friends suggested they spend around a thousand dollars to go on a vacation inside China. Normally, she'd say yes.
ZHAN: (Through interpreter) But this time, I refused. I said that, in my current situation, even though I can afford it, I don't know what the future holds, so I want to put it on hold for now. I want to at least have a stable job or some free time before I go.
KUHN: Consumer confidence in China has yet to recover to pre-pandemic levels. You can see that on the streets.
UNIDENTIFIED PERSON #1: (Non-English language spoken).
UNIDENTIFIED PERSON #2: (Non-English language spoken).
KUHN: Restaurants offering 40-cent breakfasts are packed. Stores hold flash sales and wage price wars. Some Chinese continue to splash out on luxury items, but...
DAVID DAOKUI LI: There are also a large amount of households who are so-called downgrading their consumption.
KUHN: David Daokui Li is an economist at Tsinghua University in Beijing. He notes that China's traditionally high rate of savings has been boosted by the pandemic.
LI: They are not consuming expensive goods as before. Instead, they're buying less expensive, perhaps less quality goods.
KUHN: Li says that to boost growth, China should increase consumption from its current 49% of GDP to around 51%.
LI: With 1- to 2% increase in Chinese households' consumption as share of GDP, this can more than offset the impact of the tariff imposed by President Trump.
KUHN: The Chinese government has been offering consumers rebates and trade-ins, which has helped, but Li says the rebates need to be bigger. Li says that building a stronger pension and health care system would also bolster consumer confidence, but that will take more time. He says he hopes the U.S. and China can avoid a trade war through negotiations, but also...
LI: Let me thank President Trump for giving a sense of urgency to our policy makers.
KUHN: Jasmin Zhan feels a sense of urgency, too. Before, she used to savor fancy lunches, teas and coffees.
(SOUNDBITE OF STEAM HISSING)
KUHN: Now she's moved behind the espresso machine, working up to 12 hours a day as a barista. When she's with friends, she says...
ZHAN: (Through interpreter) What we talk about most is not how we live, but just how we survive. In the past, there are many ways to do that, such as living a good life. Now it's just about surviving. It's just that simple.
KUHN: For the time being, Zhan does not expect to make as much money as she used to or work 9 to 5. She realizes that she can still be happy with less shopping and dining.
Twenty-six-year-old hospital nurse Wang Zitong feels the same way. We found her at Luckin Coffee, where a cup of coffee costs about half the price at Starbucks. Wang says she cut her weekly spending by about a quarter, but she's upbeat about China's economic future.
WANG ZITONG: (Through interpreter) No matter how much you spend, as long as you can maintain your average quality of life, you shouldn't consider it as a consumption downgrade.
KUHN: Wang says she now spends less on food and toys for her cat, and she wants to buy gold, a popular investment for many Chinese in uncertain times.
Anthony Kuhn, NPR News, Beijing. Transcript provided by NPR, Copyright NPR.
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