As deflationary pressures increase in the world’s second -largest economy, consumer behavior changes in ways that could lead to further downward pressure on prices, raising concerns that deflation could be established, causing more headaches to the leaders.

Data showed Monday that consumer prices decreased by 0.1% in May over a year earlier, with the “war” of bids raging in various areas, from cars to e -commerce and coffee, amid concerns about over -duty and subconscious demand.

Deflationary pressures on China

“We still believe that persistent surplus production capacity will maintain deflation in China both this year and next year,” Capital Economics said in a research note.

The “war” of bids, from restaurants selling breakfast for just 3 yuan ($ 0.40) to supermarkets offering flash sales four times a day. But this trend is worried about economists who believe that price wars are ultimately unsustainable, as lost businesses can be forced to close thousands of people to lose their jobs, further fueled deflation.

Price decline has accelerated growth in the Chinese market for used luxury items after the pandemic, with annual growth rates exceeding 20% ​​in 2023, according to a zhiyan consulting sectoral report from last year.

But this development has also led to an increase in the volume of those items available for sale – which is perceived at the level of discounts offered.

Huge discounts on the market for used luxury items

Some new stores, such as Super Zhuanzhuan, offer discounts of up to 90% of their original price, compared to the standards of the industry that have been 30-40% in recent years. Discounts 70% or more are also common on large used platforms, such as Xianyu, Feiyu, Ponhu and Plum.

“In today’s economic environment we see more existing luxury consumers turning to the used market market,” said Lisa Zhang, a Daxue Consulting expert, a market research and strategy company focusing on China.

“But the sellers” find more discounts and this is due to the highest competition, “he points out.

In Super Zhuanzhuan, a green Christie of Coachwhich its first owner bought for $ 3,260 ($ 454) for sale for 219 yuan ($ 30). A necklace Givenchy G Cube worth 2,200 yuan can now be sold for just 187 yuan.