China’s Sluggish Economy: Housing and Luxury Goods Struggle to Sell, Sotheby’s Cancels Online Sales in Mainland China

Sotheby’s Auction Scene (AI-Generated Image)

People News - According to Renmin Bao, Xi Jinping’s New Year’s speech promising "stable economic development" has fallen flat, as China’s economy continues to show signs of decline in its first month of the year. Sotheby’s has withdrawn its e-commerce operations from mainland China, while the top 100 Chinese real estate firms saw a 16.5% year-on-year drop in January sales. Financial experts believe U.S. tax hikes will further exacerbate China’s economic downturn.

According to a report by Radio Free Asia, for decades, mainland China was a crucial market for the British auction house Sotheby’s, with Chinese demand helping to sustain high-end goods prices. However, The Financial Times reported on Sunday (February 2), citing three informed sources, that Sotheby’s has shut down its "Buy Now" e-commerce service in mainland China in recent months due to weakening demand.

The three sources also revealed that the 280-year-old auction house has laid off some employees in mainland China, though key personnel will continue to serve as consultants.

Sotheby’s launched the "Buy Now" platform in Hong Kong in 2022 and expanded it to mainland China in the first half of 2023 to mark its 50th anniversary in Asia. However, less than two years later, Sotheby’s has ceased this business in the mainland, though the initiative continues in Hong Kong.

At its inception, Sotheby’s had promised mainland Chinese collectors round-the-clock, year-round access to immediately purchase luxury goods and fine art. During the COVID-19 pandemic, major auction houses like Sotheby’s, Christie’s, and Phillips ramped up online sales, viewing fixed-price platforms as a way to attract entry-level customers new to art and luxury goods.

Reportedly, Sotheby’s began hosting events in 2023 at its China headquarters in Shanghai, partly to promote its fixed-price sales. However, a source stated that since May last year, the company has not held any events there.

Global Luxury Market Declines

Although Sotheby’s told The Financial Times that China remains a key market for art and luxury goods, and that its Beijing and Shanghai offices remain open and active, the company’s global auction sales dropped 24% year-over-year in 2023. Art industry insiders suggest that the retreat from China is part of a broader global contraction.

Beijing-based "89 Artist" Ji Feng told Radio Free Asia that this is clear evidence of China's economic deterioration, with severe deflation posing dire consequences. In an economic downturn, Chinese consumers deprioritize luxury goods and art purchases.

Ji Feng stated: "Right now, we are experiencing deflation. Inflation wouldn't be a problem—it simply means rising prices across the board. But deflation is the worst scenario for the economy. As artists in Beijing’s Songzhuang say: when the economy improves, art is the last thing people buy; when the economy worsens, art is the first thing they sell."

Real Estate Market Shows No Signs of Recovery

According to reports from Bloomberg and Chinese media outlet The Paper on Friday (January 31), the top 100 Chinese real estate firms saw their sales decline again in the first month of the year, down 16.5% year-over-year.

Ji Feng told Radio Free Asia that in the Beijing suburbs where he lives, housing prices have already plunged well below half of their previous peak. He sees this as another indicator of China’s economic decline. With U.S. tariffs in place, he predicts that China’s economy will not improve for at least three to five years.

"Housing prices in Yanjiao (a Beijing suburb) haven’t just been cut in half—they’ve dropped even further. China’s economy relies on three key growth drivers, and two of them are already dead, leaving only foreign trade. But now, with Trump back in power, tariffs have already increased by 10%, meaning the economy won’t recover for at least three to five years."

Chinese financial scholar He Jiangbing also told Radio Free Asia that Sotheby’s decision to scale back operations in mainland China is clearly linked to the economic downturn. He further noted that the ongoing crisis in China’s real estate sector is the most visible and direct sign of the country’s economic decline.

According to He Jiangbing, China's two-decade era of soaring housing prices is gone for good. He attributes this to a combination of economic decline, a shrinking population, and excessive real estate development, which has resulted in a staggering 600 million housing units.

"Housing prices in mainland China will only continue to fall—there’s no way we’ll see another 20-year price surge. First, the population is shrinking. Second, the total housing stock stands at 600 million units, which is an oversupply with insufficient demand. Third, the economy is weakening, and when the economy declines, there’s no housing market boom."

Regarding China’s future economic trajectory, He Jiangbing argues that years of hostility toward Western democracies have led to China’s current predicament of "self-isolation," which is effectively economic decoupling. As a result, recovery is unlikely.

"Over 40 years ago, China isolated itself by choice, so it could later open up. But now, the doors have been locked from the outside—this time by the United States. And China doesn’t hold the key. The U.S., Japan, Australia, South Korea… China has alienated all of them. This is essentially decoupling, taking us back to where we were 40 years ago."

Chinese authorities have introduced a series of measures to boost the stock and real estate markets, including lowering borrowing costs for existing mortgages, easing home-buying restrictions in major cities, and reducing property purchase taxes. However, these efforts have yielded little success.

According to Bloomberg, analysts remain skeptical about a real estate market rebound in 2024. Fitch Ratings estimates that housing prices will drop by 5% in 2025, while new home sales, measured by floor space, will decline by 10%.