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With China finally having relinquished its zero-COVID strategy, allowing markets and borders slowly to reopen, albeit alongside a sharp increase in pandemic infection, the diamond industry is looking for signs that the country that has led sales growth for the past 15 years is finally on its way to recovery.

As the Rapaport news service noted it its recent market report, while consumer spending is taking time to resume, jewelers expect a release of pent-up demand in the coming months.

One of the first indicators it was believed would a resumption of jewelry trade show in Hong Kong in March, with the first day of the Hong Kong International Jewellery Show and Hong Kong International Diamond, Gem & Pearl Show actually coinciding with the end of the city’s mask mandate, which had been enforced for more than two-and-a-half years.

According to industry reports, traffic at the shows was stronger than sales, as buyers still remained skittish in what remains an uncertain market.

According to the Rapaport report, suppliers have increased discounts — particularly for 1-carat and larger goods — to encourage Chinese buyers at the show, reduce excess inventory and improve liquidity. But, it added, many exhibitors still left the show disappointed.

Other were more optimistic. “The Hong Kong market had experienced a negative trend in the last few months, but now we’re seeing signs of a rebound,” said Vipul Shah, Chairman of India’s Gem & Jewellery Export Promotion Council (GJEPC). “This resurgence in Chinese consumption could potentially lead to even greater improvements. In China, the average savings rate is around 40 percent, which translates to trillions of dollars that could potentially be spent in a ‘revenge buying’ frenzy, similar to what we’ve seen in other world markets after prolonged lockdown periods. As a result, we anticipate significant growth in the diamond and diamond jewelry industry over the next six months.”

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It is likely to come, but as yet China not strong rebound in consumer spending, according to an article appearing on CNBC. Quoting Lei Xu, the CEO and executive director of e-commerce giant, it noted that a recovery to the extent that it is occurring is imbalanced, and it will most probably be necessary to wait until second half of the year for its speed to improve.

JD reported a 7.1 percent increase in net revenue in the fourth quarter to 295.45 billion yuan ($42.8 billion), which was below expectations for 296.2 billion yuan, according to Reuters.

Data released by the Chinese government showed that consumer prices rose by a single percentage point from where they were February 2022, when the intermittent COVID closures were in full swing.

The still sluggish consumer price index “casts doubt on the strength of domestic demand recovery in the household sector,” stated Zhiwei Zhang, president, Pinpoint Asset Management, in a note quoted by CNBC. “It is puzzling to me as it contradicts with other data points that suggest the recovery of domestic demand is quite strong.”

An online sales recovery was still unimpressive, said Alibaba CEO Daniel Zhang during a quarterly earnings call last month.

The Chinese government announced a relatively conservative economic growth target of around 5 percent for all of 2023, with officials saying boosting consumption is a priority in driving driver of overall economic growth.


But the fundamentals of the Chinese are essentially sound, and there are other indicators that  a strong rebound will take place.

China’s National Bureau of Statistics reported that the manufacturing purchasing managers’ index rose to 52.6 in February, the highest reading since April 2012. The non-manufacturing index measuring activity in both the services and construction sectors improved to 56.3.

China’s home sales ralso ose in February from a year earlier, which was the the first such increase since June 2021 as policymakers expanded support for the sector. According to Bloomberg, road congestion in major cities has increased, subway ridership has returned to pre-pandemic levels and restaurant and mall spending is up.

Imbalances in the Chinese economy may be responsible for the fact that the recovery is patchy thus far. There was a  sharp increase in savings in 2022, is a result of reduced investment spending, by mid- and upper-income households, and a reversal of this trend following the relaxation of the COVID regime would explain part of the rise in the purchases of new homes.

But a sustainable and full recovery, say Chinese market experts, will come when there will be a substantial increase in disposable income in low and middle-income households. This hopefully will be felt during the second half of the year.

Hong Kong at night. (Photo Meric Dagli on