Asia-PacificBeijing Letter

Crisis of confidence leaves economy caught in post-Covid maze

Cash-rich consumers are afraid to go out and spend in case bad times are around the corner

It was getting dark and I had been wandering through the hutongs, narrow lanes sometimes just broad enough to stretch out both arms, for nearly 20 minutes before I noticed that I was going around in a circle. The motor scooters and covered tricycles pushed up against the alley walls were indistinguishable in the deepening gloom, as were the slender doorways into the low, single-storey courtyard houses behind them.

But after I passed for a second time a clothesline with a pink patterned bed sheet and a black T-shirt with the motto “I really want to rest”, I changed course and quickly found myself outside the hutong. Steel walking boards led the way past building works towards the restaurant, a brick and steel cube with windows and doors shaped like the portholes of an ancient submarine.

Looking up, I remembered that I had been here once before to visit the full scale replica of a Buddhist temple on the roof of a modern, office building. This was the site of Longfu temple, which was built during the Ming Dynasty in 1452 just 1.5km from the Forbidden City but was reduced to ruins by a fire in 1901.

There had long been a market around the temple and the monks continued to rent out space to vendors who sold books and knick-knacks. It was famous for its snacks, including deep-fried, stuffed buns and pastries stuffed with red bean paste and dusted with sugar and coconut flakes.

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In 1998, developers built a nine-storey block on the site of the temple but it was destroyed by fire five years later. Nothing flourished there after that and local people said it was because the site had bad feng shui.

So instead of building on top of the temple, the latest developers put the temple on top of the office building and they rent it out as a venue for exhibitions, photo shoots and parties. The roof offers a fine view of the hutongs below and the courtyard houses which once housed imperial officials but are now a bit run down.

Most of Beijing’s population used to live in hutongs but all but a few have been demolished, replaced by gleaming towers of steel, glass and cement. The hutongs near the Longfu temple will be preserved and renovated under an ambitious urban renewal project designed to make the area part of a national cultural centre by 2035.

Residents will not be forced out but they will be offered incentives to go and as each one leaves, their house will be renovated and repurposed. Instead of homes, they will become restaurants, miniature hotels and that most reliable herald of the death of the neighbourhood, galleries.

The streets around the rooftop temple are already full of fashionable bars and restaurants but as we shared small dishes around at a long table in a glass-walled private room, our restaurant appeared to be almost empty. A restaurant-owner in another part of the city told me earlier that day that business was slow everywhere.

“This year has been different from what we thought. Now it’s winter and it will be quiet from now until Chinese New Year,” he said.

“The pandemic was bad at the start and at the end but 2021 was good.”

He was the second person in a week I had heard sounding almost nostalgic for the days of the zero-Covid policy, which ended abruptly a year ago. A friend in Shanghai reminded me that for most of the time that China was closed off from the world, people could live fairly normally once they had a negative PCR test every two days.

“Those testing places employed a lot of people. That was the Covid economy,” he said.

“Have you noticed how easy it is to get a taxi? How fast your food delivery comes? Those guys have no work.”

Everyone agrees that the problem is one of confidence, so that cash-rich consumers are afraid to go out and spend in case bad times are around the corner. And the chief confidence killer is the crisis in the property market, which has driven many of the country’s biggest developers to the brink of bankruptcy.

I asked someone in the industry how his company was doing and he said it was doing just the same as the others.

“We’re in the ICU, we all are. But we’re not going to die. We’re going to wait for the asset to go up in value again,” he said.

“We could be here for a long time.”