Fu Peng, chief economist at brokerage Northeast Securities. - Photo: Bilibili
BEIJING (SCMP): An outspoken economist has gone viral on Chinese social media as his down-to-earth comments about China’s slowing economy struck a chord with the general public.
Fu Peng, chief economist at brokerage firm Northeast Securities, addressed a slew of issues, including the stock market slump and the real estate crisis, at the 2024 Phoenix Financial Forum for the Greater Bay Area at the start of September.
His straightforward and critical remarks, with Fu having previously only attracted attention within financial circles, quickly circulated across online communities.
Widely shared comments include his vivid illustration of the concept of a middle-class consumption downgrade, by linking consumers’ choice of coffee to the shrinking property market.
“Once property values drop, consumer spending falls rapidly, with middle-class buyers shifting from 40 yuan coffees to 8 yuan ‘buy one, get one free’ deals,” he said at the event, organised by ifeng, a news portal under Hong Kong’s Phoenix TV.
"The ‘wealth effect’ brought by real estate has faded, exerting a direct impact on consumption" -
Fu Peng, Northeast Securities
The remarks prompted heated discussion at a time when downward pressure on the world’s second-largest economy is increasingly being felt at the micro level, as companies downsize, households cut spending and investors remain cautious.
Fu did not respond to an interview request from the Post, but at the event, he noted that the decade since 2009 marked a period of consumption upgrades in China, driven either by increases in wages or real estate gains.
However, he warned that relying on the property market was dangerous, as once values drop, consumer spending falls rapidly.
“The ‘wealth effect’ brought by real estate has faded, exerting a direct impact on consumption,” he wrote in a follow-up post on Chinese microblogging platform Weibo, where he has nearly 3.9 million followe
Looking back at the experience of the Japanese economy between 1990 and 2002, Fu said it saw households reluctant to spend, abnormally high deposit levels and a wave of investment overseas instead of locally.
"The situation in Japan back then is basically the same as what we are experiencing now,” he noted in the speech, which had attracted over 162,000 views by Friday afternoon on Bilibili, a popular video-sharing app known for its anime content.
During the 22-minute speech, Fu also analysed other issues, including population ageing, weak demand, low confidence reflected in a stagnant stock market and declining investment returns.
Overseas expansion of businesses offers limited relief, while cost-cutting measures like lay-offs further weaken domestic demand, complicating efforts to stimulate the economy, he said.
In another video shared on Weibo by ifeng on Wednesday, Fu’s comment about how real estate had become no longer investible and instead something to consume that required an annual maintenance cost equal to 2 per cent of the total price had received 2 million views.
Many online users praised Fu as a “conscientious economist”, saying his thorough analysis helped the public gain a more accurate understanding.
“It is rare to see someone like Fu who dares to speak out and is truthful in his views,” one said user on Weibo.
And with China’s economic growth having slowed to 4.7 per cent year on year in the second quarter, another user said that “Fu is so right”.
“With half of my stock investment lost and housing prices down by 30 per cent, and still having to repay loans, how can ordinary people like us dare to consume?” the user said.
Analysts had said that China’s economic growth in the second quarter was “well below expectations”, having hit 5.3 per cent in the first quarter.
Beijing set an economic growth goal of “around 5 per cent” for the year, but on Thursday, President Xi Jinping seemingly subtly toned down China’s focus on achieving its annual economic growth goals for 2024.
Xi said that China “should strive to fulfil the economic and social development goals and tasks for the whole year”, with Beijing’s top leadership having previously said in the communique following July’s third plenum that China “must remain firmly committed” to accomplishing this year’s goals.
"Other economies have also experienced huge economic bubbles, but they have a more solid foundation." -
Simon Zhao, Beijing Normal University-Hong Kong Baptist University United International College
Simon Zhao, associate dean at the faculty of humanities and social sciences at the Beijing Normal University-Hong Kong Baptist University United International College, said the heated discussion on Fu’s views reflected how ordinary people have personally felt the huge impact of the economic downturn.
“Other economies have also experienced huge economic bubbles, but they have a more solid foundation, such as more adequate social relief and public housing, which China is currently lacking,” he said.
The strong resonance with Fu’s comments in China has occurred as “many economists have long failed to speak out about the real economic situation and the drawbacks of industrial policies,” Zhao added.
Bearish assessments of the Chinese economy and the government’s policies have become sensitive content in China in the past year.
At an annual economic work conference in December, officials were instructed to play up a bright view of the Chinese economy and step up public relations campaigns to lift confidence.
In a post on its official WeChat account the same month, the Ministry of State Security urged people not to be swayed by those who sought to “denigrate China’s economy” through “false narratives”. - South China Morning Post/ANN
