China’s consumers refuse to open their wallets. Is ‘luxury-phobia’ the problem?

As China struggles to boost consumer spending, a professor at one of the country’s top universities has argued that authorities first need to overcome a psychological barrier: a deep-seated “luxury-phobia” that has taken hold among the Chinese public.The suggestion by Su Jian, a professor at Peking University, comes amid a debate in Chinese policy circles about how to revive the country’s sluggish demand, with retail sales slowing despite Government efforts to rebalance the economy towards a consumption-led growth model.For Su, the answer will partly lie in a change in attitudes: the pursuit of luxury goods “should not be stigmatised, but rather seen as a sign of social progress”, he wrote in an essay published last week.The proposal appears to run counter to mainstream opinion in China, given the Government implemented a strict austerity drive and campaign against extravagant spending last year.The campaign has been especially restrictive within the civil service, where excessive local enforcement has at times led officials to hide their spending – shunning not just luxury goods, but even routine social acts like dining out – to avoid scrutiny.Entrepreneurs and other wealthy individuals have also started to lie low to avoid being accused of flaunting their wealth, after the Government cracked down on displays of lavish consumption on social media.