Beijing
At Nanchengxiang restaurants in Beijing, customers treat themselves to a breakfast buffet with three types of rice porridge, sour and spicy soup, and milk – all for the price of 3 yuan ($0.40).
Many good, cheap choices popped up during the pandemic, said 71-year-old Gao Yi, while sharing breakfast with his grandson in one of the chain’s 160 outlets in the Chinese capital.
Not all of them last. But there are new good deals all the time, you just have to go out to find them. That’s what deflation looks like in China.
Poor consumer appetite is fuelling a price war among lower-end restaurant chains in China, which analysts say could harm smaller businesses struggling to keep up with discounts offered by bigger players. As witnessed by Japan in the 1990s, deflation – if prolonged – can weigh on economic growth.
Unlike in Western countries, Chinese people were left largely to fend for themselves financially during the pandemic, with government support directed mainly toward the manufacturing sector. Once the restrictions were lifted, there was no immediate consumer splurge as some economists had predicted. With wages and pensions hardly budging and the job market highly uncertain, spending appetites are limited, and in a barely growing economy, confidence is low. The central Nanchengxiang outlet was packed on Thursday, as it has been every morning since the 3 yuan deal was launched in May, according to staff. The company did not respond to Reuters’ questions about their profit margins and business strategy.
