Shanghai Shopping Mall to Close, Leaving Only U.S. Consulate as Tenant.
Shanghai’s Westgate Mall, once a bustling hub of designer fashion stores, is set to close on August 1, leaving only the U.S. Consulate’s visa section as its sole occupant. An employee confirmed the closure to Radio Free Asia on July 24, stating, “Starting from August 1, all businesses except the U.S. Consulate will be closed.”
The U.S. Consulate will continue to offer visa and immigration services from the mall’s ninth floor, located on Nanjing Road. In a notice posted on its official website, the Consulate indicated that other businesses would cease operations due to planned renovations. It assured that the Non-Immigrant Visa and American Citizen Services units would remain operational.
This closure occurs amid a significant economic downturn in China, which has resulted in nearly 7,000 retail outlets shutting down in the first half of 2024. These closures persist despite the Chinese Communist Party’s efforts to stimulate economic growth through increased consumption.
One major tenant, the Shanghai Westgate Isetan Department Store, closed at the end of June after its lease expired. A local resident, identified only as Hu, expressed concern over the numerous business closures in the city, noting that two-thirds of the restaurants at a nearby intersection had shut down. “Nanjing Road is the top shopping street in China, possibly even in Asia,” Hu stated. “It used to be crowded with foreigners, but now the malls are nearly empty.”
Economic Struggles Affect Spending Habits
The economic downturn has severely impacted Shanghai. Chen Soong-hsing, an adjunct professor in China Studies at Taiwan’s Chinese Culture University, emphasized the city’s struggles, stating, “Foreign capital is leaving, and even Chinese companies are relocating overseas.” He added that the wealthiest individuals are also moving away, highlighting a troubling trend.
A report from investment community platform PEDaily.com revealed that at least 6,882 stores in China announced closures in the first half of 2024, affecting major chains like Walmart and Alibaba’s Freshippo. A McKinsey survey noted that concerns over unemployment, income instability, and debt have led to decreased consumer demand.
“Ordinary people simply do not have money to spend,” Hu explained. He added that even those with disposable income are being cautious with their spending. Chen warned that if conditions are so dire in Shanghai, smaller cities are likely facing even worse situations.
He criticized the current leadership under Chinese Communist Party leader Xi Jinping for failing to address the economic issues effectively. “They continue to cut interest rates and stimulate liquidity without understanding the root of the problems,” Chen said.
Hong Kong Faces Similar Economic Challenges
The economic struggles are not confined to Shanghai. On Thursday, China announced a significant cut in its central bank’s one-year medium-term policy loan lending rate, reducing it by 20 basis points to 2.3%. This marks the largest rate cut since the end of COVID-19 restrictions in 2022.
Meanwhile, a survey by RFA Cantonese revealed empty offices and piled-up utility bills in The Center, a US$7 billion skyscraper in Hong Kong. Many units were vacant on July 24, with unopened bills accumulating outside office doors.
A notice on one closed office, previously occupied by asset management group Sanne Group Asia, indicated the company had relocated. An office worker, who requested anonymity for fear of repercussions, stated, “The government is struggling to restore economic confidence.” He noted that foreign investment has decreased by 20% to 30% compared to previous levels.
An IT worker in the same building, also speaking anonymously, confirmed that many colleagues had emigrated due to ongoing political unrest. “We have some vacancies in my office because some of our colleagues have left,” he said. “Around 20 fewer people work with us now.”
Real Estate Market Challenges
At the end of 2023, office spaces in The Center were renting for about HK$28,000 per square foot, down from HK$50,000 per square foot in September 2018. Simon Lee, an honorary teaching and research fellow at the Chinese University of Hong Kong Business School, described the current situation as “unfortunate.” He noted that while The Center may not fully reflect the city’s economy, it indicates a broader trend.
“Foreign investors are downsizing or withdrawing altogether,” Lee said. “Chinese capital should be the backbone of the office market, but many investors are facing difficulties and poor risk management.”
Lee expressed hope for a recovery, stating that if Hong Kong could regain its economic momentum from 2018, demand for office space would surge. However, he questioned when that recovery might occur.