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Andrea Felsted and Anjani Trivedi

What Happens When China’s Bling Binge Comes to an End?

The delta variant and government interest in “common prosperity” may soon threaten consumption in China. That'll hit the luxury industry hard.

Are we still spending?

Are we still spending?

Source: Getty Images AsiaPac

Since China emerged from the first wave of Covid-19 lockdowns in 2020, the country’s shoppers haven’t been able to get enough Hermes sneakers and Louis Vuitton handbags. Their so-called “revenge spending” has fueled a rebound in sales of upmarket goods — and sent luxury valuations soaring — to heights that are nothing short of remarkable. 

But the party might be crashing to a halt. The past few weeks have brought some concerning signals from China: Covid-19 cases are rising, retail sales are slowing and most worrying, a government crackdown on certain growth sectors and comments from President Xi Jinping about the need for “common prosperity” raise the possibility of curbs on overt shows of wealth. That’s the wrong vibe for making extravagant purchases.