When crowds are back but money doesn’t follow 🤔| Following the Yuan

What looks like post-COVID resilience is shaped by a new normal still catching up to expectations from China’s double-digit growth era.

Hi it’s Yaling,

Since China reopened in late 2022 after COVID, I’ve been asked and been asking people this question:

Is the Chinese economy really that bad?

I remember discussing multiple phenomena from consumers seeking cheaper replacements, to white collar professionals swarming to cheap lunch deals, to special forces tourism — all can be wrapped up under the umbrella of consumption downgrade. Since 2024, it has become increasingly clear that downgrading one’s options is not just a vibe, but represents something more structural.

At this turning point, what you see may seem contradictory to one another.

If you reside outside of China, have made trips back after COVID, and feel relieved after seeing that the shopping streets and malls are filled with people, you might feel like China has gone back to how you remember it.

But what you may not realize is that things have fundamentally changed. Traffic may no longer be directly correlated with value.

In the consumption downgrade era, brands and manufacturers have also downgraded — they’ve lowered their quality or switched to cheaper alternatives, they have cut marketing budget or use a combination of AI and freelancers to produce campaigns — that’s how they can stay competitive in the price war.

We are seeing this phenomenon across different industries. Since the Labor Day holiday is around the corner, let’s use travel as an example: