Hard Times Arrive for Beijing, Shanghai, Guangzhou — Why Are They Falling Out of the “First-Tier City” League?

During the 2025 May Day holiday, many tourists in China chose not to spend. Vendors across various regions lamented, “There are lots of people, but they’re not buying.” The image shows street scenes in Shanghai during the holiday (video screenshot).

[People News] Shanghai, known as the “magic city,” has long been regarded as the leader of China’s economy and a symbol of prosperity and modernisation. Yet, the Financial Times recently published an article noting that Shanghai is not only experiencing sluggish economic growth, but is also falling behind in the field of consumption. And it’s not just Shanghai—Beijing, Guangzhou, and Shenzhen are all facing hard times. So, where exactly is the problem?

Xu Jin, economics editor at the Financial Times, wrote on September 10 that China’s first-half 2025 economic data reveals a worrying sign: first-tier cities are not only growing more slowly but are also losing momentum in consumer spending.

From the perspective of GDP growth, the national rate was 5.3%. But the leaders are no longer the traditional first-tier cities. Yantai led the top 30 cities with a growth rate of 6.4%. In comparison, Shanghai and Shenzhen recorded 5.1% and 5.3%, while Guangzhou lagged at just 3.8%. Other Guangdong cities fared even worse: Foshan, 2.3%, Dongguan, 4.8%. Hefei’s 6.0% growth put it ahead of the Yangtze River Delta megacities.

The article points out that with exports struggling and investment sluggish, consumption has become the last straw many places are clinging to. But in the first-tier cities, consumption is also disappointing.

According to China’s National Bureau of Statistics, the total retail sales of consumer goods in the first half of the year reached 24.5458 trillion yuan, up 5.0% year-on-year, an acceleration of 0.4 percentage points from Q1. Retail goods sales were 21.7978 trillion yuan (+5.1%), and catering revenue was 2.748 trillion yuan (+4.3%).

In contrast, Beijing’s total retail sales in the first half of 2025 reached 673.4 billion yuan, down 3.8% year-on-year. Shanghai’s stood at 826 billion yuan, up only 1.7%—both well below the national growth rate. Catering is even more concerning: Beijing’s catering revenue was 67.26 billion yuan (–3.6%), and Shanghai’s was 99.14 billion yuan (–2.6%). Meanwhile, most well-known second- and third-tier cities saw restaurant growth well above the national average: Changsha +5.4%, Chengdu +4.8%, Wuhan +10.7%, and Chongqing +6.4%.

In real life, an “extreme frugality” wave is sweeping through first-tier cities in 2025. White-collar workers who once splurged on coffee at cafés are now content with instant coffee from the office pantry.

According to the public account “Jair Vision,” at a Beijing Guomao financial firm’s meeting room, 28-year-old investment consultant Li Wei demonstrated to colleagues how to prepare “three dishes and one soup” for just 15 yuan—by microwaving ready-made meal packs. On her wrist was a mechanical watch worth 30,000 yuan.

Despite earning 21,000 yuan a month, her expense log showed an average monthly spending of just 3,124 yuan.

In Shanghai’s Hongqiao business district, sales of 39-yuan lunch sets at FamilyMart fell 27% year-on-year, while the microwave meal shelf next door now needs to be restocked three times a day.

Meituan Research Institute data shows that in the first half of 2025, 68% of food delivery orders were priced below 15 yuan, up 22 percentage points from three years ago.

Among Shanghai’s white-collar workers, “bringing lunch from home” has become a new form of social capital. Office microwaves now draw daily lunchtime queues—an emblematic scene in financial district towers.

The hairdressing industry is undergoing structural upheaval. Average spending per customer in traditional salons has fallen from 258 yuan to 138 yuan, while sales of home haircut kits have surged 300%.

Transport data is even more disruptive. Didi’s average daily orders are down 1.8 million from peak levels, while Hello Bike’s membership has soared past 120 million.

In Shenzhen, some white-collar workers have devised “subway + walking + shared bike” commuting models, cutting their monthly travel costs to under 80 yuan.

This silent consumption revolution is reshaping every detail of life in first-tier cities.

Hard times have indeed arrived for them. The article explains that first-tier cities are like the “canaries” of China’s economy—their reactions serve as the thermometer of macroeconomic health.

The analysis continues: when the economy weakens, the signals are transmitted from the most sensitive places to the least sensitive peripheries. In first-tier cities like Shanghai, past advantages lay in their links to both overseas and domestic markets, making them highly sensitive to macro changes. Their consumption was largely supported by the middle class. But with housing prices falling and the “35-year-old phenomenon” (job insecurity for mid-career workers), this middle class has grown cautious about spending.

Today, in China’s first-tier cities, 5,000-yuan monthly salaries are common. Supermarket clerks working 10-hour days with four days off a month typically earn around 5,000 yuan. Kindergarten childcare staff earn only 3,000–4,000.

The much-discussed nationwide social security program has added strain: the rapid rise in contribution bases has put immense pressure on low-income earners and businesses. As of early September, no province had yet announced new contribution ceilings.

For urban residents, high housing prices once formed the backbone of their wealth. Now, in Beijing and Shanghai, prices have essentially fallen back to levels of a decade ago. Most revealing are second-hand home prices, which keep dropping regardless of policy easing.

In the past, real estate agents in Shanghai and Beijing treated homeowners politely. Now, agents are the ones in the dominant position. They bluntly ask: “What was your purchase price? You’re already losing money.” If they think the deal isn’t worthwhile, they simply say, “No, I won’t list it,” even threatening to walk away. Most sales now involve losses; in some cases, the decline has wiped out entire down payments, forcing sellers to cut their losses.

The article notes that while each issue has its own causes, the root always circles back to real estate and fiscal competition.

The Yangtze River Delta and Pearl River Delta are China’s most economically developed regions, with deep ties to the outside world. When the external environment shifts, they are hit first and hardest. In the north, when the economy falters, Beijing’s political advantages allow relative stability. But in southern cities like Shanghai and Shenzhen, slowdowns manifest faster and more sharply.

The article concludes: the one who tied the knot must untie it. Problems in housing, consumption, and wealth may look separate, but at their core, they are all economic problems. Without an economic recovery, there is no solution. △