Growth Dragons in Chengdu

I’m in Chengdu for a holiday these two weeks. I always prefer getting a sense of what’s happening on the ground in China rather than relying solely on media reports.

I asked the driver about the property market situation, and he mentioned it's in a recession. He said properties now cost about RMB 20k per square meter, down from RMB 30k per square meter previously, representing a significant 33% reduction. Such a substantial drop could dent real estate aspirations and dampen sentiments.

Another issue is China's low birth rate. A woman in her 40s shared that she has a 22-year-old daughter in university. When asked why she didn't have more kids, she explained that raising children brings a lot of pressure. Government schools are limited and competitive, while alternative private education is prohibitively expensive.

Furthermore, having sons exacerbates the pressure, as cultural norms dictate that parents should buy them a house for marriage. This adds unnecessary strain, dissuading couples from having more children. It's not that Chinese couples don't want kids; it's the financial and emotional burden associated with raising them. Economic progress acts as an effective form of contraception, as the cost of raising children rises.

Even the work culture is demanding. HR policies in the private sector are less regulated than in the public sector. A waitress mentioned she only receives 5 days of annual leave after completing one year of service, and any additional days come with reduced pay. In comparison, Singapore mandates more generous annual leave, even in the private sector. Perhaps China will implement similar regulations eventually, as profit-driven private sectors tend to offer less favorable terms when possible.

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Payments in China have long posed challenges for foreigners. While the country has been cashless for some time, obtaining a local payment service without a local bank account, which requires a local address and phone number, has been difficult. However, since last year, Alipay and WeChat Pay have made it easier for foreigners by accepting credit cards issued by Mastercard or Visa. Despite this progress, there's still a ¥1,000 limit per day, necessitating the use of RMB cash. Additionally, currency exchange is restricted to banks, with tedious paperwork requirements reflecting the controlled nature of the RMB and compliance in the financial sector.

Tencent's WeChat is indispensable in China. Besides being a primary communication platform (WhatsApp and Telegram don’t work in China without international roaming), WeChat enables me to book Didi rides, order Meituan takeouts, and more. When I visit stores, I often use WeChat to scan menus, place orders, and make payments through its mini-programs, eliminating the need to download multiple apps. Despite calls to dismantle the walled gardens of big tech in China, Tencent remains a dominant force.

The streets of Chengdu are filled with a staggering variety of electric vehicles, mainly Chinese brands such as Geely, BYD, Li Auto, Aion, and Zeekr, a testament to China's advancement in the automotive industry.

Meituan is clearly the market leader, with its presence felt throughout the streets. Ele.me is rarely seen, and Nongfu beverages dominate the market, with its products stocked in nearly every shop. Even the hotel I stayed in provided Nongfu water. E-commerce continues to thrive, as evidenced by the bustling activity at the SF Express counter.

I had the opportunity to try a Moutai-infused latte at Luckin Coffee, which was exceptionally fragrant and undoubtedly the best latte I've ever had. I'm definitely going to indulge more in it.

Overall, my impression is that the economy in Chengdu is thriving. Despite it not being the busiest tourist season, the shops are bustling, roads are congested, and everything seems to be functioning smoothly. While some people tend to focus on the negatives, there's a palpable sense of determination among the locals to strive for a better future, reflecting the ethos of Chinese culture.