Q&A on China's Economy in the First Quarter | To promote economic growth, how to exert the main engine of consumption?

Xinhua News Agency, Beijing, April 15 (Xinhua) -- How to promote economic growth, how to promote the main engine of consumption?

Xinhua News Agency reporter

At the end of the first quarter, China's economic performance has attracted much attention.

Consumption is the main engine of economic growth. Since the beginning of this year, China's market sales have continued to recover, service consumption has grown rapidly, and at the same time, the growth rate of some commodity consumption has slowed down, and consumer prices have run at a low level.

Is that really the case?

Xinhua News Agency reporters conducted in-depth research, examined China's consumption situation from multiple dimensions, and objectively analyzed the resilience and potential of China's huge market.

The consumption situation is stable and improving

How do you view the current consumption situation?

On April 5, the reporter came to the Beijing Summer Palace Scenic Area and saw that the six gate areas were fully opened to enter the park, the two-dimensional code of orders was added to enter the park quickly, and ramps were added in Yulan Hall and Le Shou Hall, and soft isolation belts were set up to guide the flow of passengers.

According to data from the Beijing Municipal Park Management Center, 11 parks in Beijing, including the Summer Palace, and the China Garden Museum received nearly 2.2 million visitors during the Qingming holiday, an increase of 16% over the same period in 2019.

On the same day, Huaihe Road Pedestrian Street in Hefei City, Anhui Province was crowded, and multiple shopping malls held themed consumption promotion activities simultaneously. During the three-day Qingming Festival holiday, the passenger flow and sales of Huaihe Road Pedestrian Street increased by about 30% year-on-year.

Looking at the whole country, during the Qingming holiday, the consumer market is booming: the cross-regional flow of people in the whole society exceeded 700 million, with a daily average of 246.795 million people, an average daily increase of 53.5% over the same period in 2023; There were 119 million domestic tourism trips and 53.95 billion yuan of domestic tourists, an increase of 11.5% and 12.7% respectively compared with the same period in 2019 on a comparable basis.

Bloomberg reported that this is the first time since the start of the pandemic that Chinese tourists spend more on holiday travel per capita than in 2019, further indicating that consumption in the world's second-largest economy is recovering.

Open more observation windows, and the vitality of China's consumption can be seen.

Let's start with the consumption of goods. In the first two months, the total retail sales of consumer goods still maintained a relatively high growth rate of more than 5%. More than 80% of the retail sales of units above designated size achieved growth, and the consumer demand for some upgraded and bulk commodities was released relatively quickly, of which the retail sales of automobiles increased by 8.7%.

Let's look at service consumption. In the first two months, retail sales of services increased by 12.3% year-on-year, of which the national catering revenue increased by 12.5%.

From the popularity of "Erbin" ice and snow tourism, the popularity of Tianshui Malatang in Gansu, to the popularity of tourism in "small airport" cities such as Mangshi in Yunnan, behind it is people's expectation for a better life, and it is also the support for the continuous recovery of service consumption.

Finally, look at the price operation. In March, the national consumer price index (CPI) rose by 0.1% year-on-year due to factors such as the seasonal decline in consumer demand after the Spring Festival, but the core CPI, which excludes food and energy prices, rose by 0.6%, which still maintained a moderate increase.

According to the Asian Development Outlook 2024 (April Edition) report released by the Asian Development Bank, China's CPI growth is expected to rise to 1.1% this year and 1.5% in 2025 as the economy continues to improve.

"A comprehensive analysis of the consumption situation cannot just focus on a single indicator. Xu Guangjian, vice president of the China Price Association, said that judging from the trend of consumption and prices in the market, China's economy has not fallen into the so-called "vicious circle of falling prices and weak consumption" in some foreign media.

In terms of segmentation, some new structural highlights have emerged in China's consumption, and residents' consumption concepts have become more rational.

A few days ago, reporters walked through Beijing Hutong, Tianjin Fifth Avenue, Guiyang Cao Zhuangyuan Street and other scenic spots, and always saw groups of "City Walk" enthusiasts.

"It's also a good idea to wander around the city with your family and experience the local customs. In the Tianjin Fifth Avenue Scenic Area, Ms. Chen, a tourist from Anhui, told reporters.

As the name suggests, "City Walk" is a walking walk through the streets, and behind it is a greater emphasis on cost-effectiveness and consumer experience.

In the investigation, the reporter found that with the change of Chinese consumption concepts, new models and new forms of consumption are constantly emerging, such as from being keen on luxury goods to shopping at discount stores, from chasing imports to domestic production; Consumption of services such as fitness and tourism has increased significantly; Replacement consumption, reverse consumption is sought after, and so on.

"This change in consumption perception cannot be misinterpreted as 'consumption downgrade'. Xu Guangjian said that the consumption of mainland residents as a whole has shifted from focusing on quantitative satisfaction to pursuing qualitative improvement, and from imitation consumption to personalized and diversified consumption.

Statistically, this trend is even more pronounced:

In the first two months, digital, green and health goods such as digital music, energy-saving washing machines and ski equipment increased by 95.1%, 167.5% and 66.4% year-on-year, respectively. The online retail sales of domestic "trendy products" such as horse-faced skirts, national style perfumes and new Chinese jewelry increased by 6.3 times, 4.2 times and 1.7 times respectively.

According to the latest data from Meituan and Dianping, since March, the number of notes related to the national "real-time flower news" reflecting the flower-viewing economy has increased by nearly 70% month-on-month, and the search popularity of "Hanfu makeup" during the Qingming holiday has increased by 2.3 times year-on-year.

Japan's Nikkei Asia recently reported that the "new Chinese style" is a combination of Chinese classical and everyday clothing, continuing the craze of traditional Han clothing, and the growing confidence and love of Chinese young people for the country has helped this fashion trend.

"The rapid growth of new consumption will continue to reshape the consumption structure, release consumption potential, and inject new impetus into economic development. Chen Lifen, a researcher at the Institute of Market Economy of the Development Research Center of the State Council, said.

The consumption potential is huge

In Beijing's Xicheng District, the Chang'an shopping mall, which opened in 1990, is ushering in a new transformation: the basement floor is updated to "Yinfa Gold Street", and community canteens, health stations, pharmacies and other consumer services for the elderly are launched; Create a space for children and children to accompany children on the third floor.

On the basement floor, Li Chunhui, general manager of Chang'an Shopping Mall, enthusiastically introduced to reporters the achievements after the transformation: last year, the average daily passenger flow of the shopping mall was 16,000 people, and the total passenger flow increased by 23% year-on-year; Compared to 2018, before the transformation, the average daily passenger flow has nearly doubled.

"There are infinite business opportunities in the changing needs of consumers. Li Chunhui said.

The super-large market with a population of more than 1.4 billion, a complete industrial system, and the total factor endowment have obvious advantages, which are the distinctive characteristics of the super-large economy and the source of power for China's consumption potential.

At present, new consumption growth points in China are emerging.

Spring is in full bloom, and it's a good time to exercise outdoors. The reporter recently visited some shopping malls in Beijing, Shanghai, Nanjing and other shopping malls and found that the sales of outdoor sports equipment brands such as running shoes and quick-drying pants are hot, and the new styles are very popular in the market.

"Since the beginning of this year, lightweight outdoor tours, mainly in surrounding cities, have been very popular, and a number of professional hiking clubs have emerged, which has led to a significant increase in sales in the store. The person in charge of a sporting goods store in Gulou District, Nanjing City, Jiangsu Province said.

According to data from the General Administration of Sports of China, since 2012, the added value of the mainland's sports industry has grown at an average annual rate of 15.4%. It is estimated that by 2025, the proportion of people who regularly participate in physical exercise in mainland China will reach 38.5%, and sports consumption is entering the fast lane of development.

Stretching the observation lens, we can see more new momentum and new space in the large consumer market:

Looking at digital consumption, as of December last year, the number of netizens increased to 1.092 billion; As of the end of February this year, the total number of 5G base stations reached 3.509 million, and the digital consumer group has grown and digital technology has been continuously consolidated, which will promote the continuous upgrading of digital consumption.

Looking at the consumption of national tide, since 2020, the national tide brand has risen rapidly. With the deep integration of humanity and economy, more new forms of cultural tourism and cultural and creative products will be born.

Looking at pension consumption, by the end of 2023, the number of people aged 65 and above in mainland China will reach 217 million. Relevant research shows that the mainland's silver economy is in an accelerated development stage, with a scale of about 7 trillion yuan, which is expected to increase to about 30 trillion yuan by 2035.

Guo Liyan, deputy director of the Economic Research Institute of the China Academy of Macroeconomics, said that compared with some developed economies, there is still room for improvement in the proportion of the mainland's development enjoyment consumer spending of about 20%.

When the new consumption grows and grows, there is still room for traditional consumption, and the potential consumer demand is constantly being released.

The reporter sorted out the relevant materials and found that there is a huge demand for updating China's home appliances, automobiles and other equipment. By the end of 2023, the number of domestic civilian cars will reach 336 million, and the number of household appliances such as refrigerators, washing machines, and air conditioners will exceed 3 billion.

"The trade-in policy is in line with the needs of residents' consumption upgrading, which can promote the release of residents' potential demand and allow more high-quality durable consumer goods to enter residents' lives. Chen Lifen said.

Urbanization is still where China's consumption potential lies.

Following the launch of free shipping in Xinjiang for the first time in 2022, Pinduoduo has once again upgraded its express delivery service and implemented free free shipping delivery into villages in Xinjiang, further shortening the distance between the terminal distribution network and consumers to within 2 kilometers.

At present, many companies such as Pinduoduo are accelerating their layout in third- and fourth-tier cities and counties, focusing on the market opportunities brought about by China's promotion of new urbanization.

One set of data is very convincing: at the end of 2023, the urbanization rate of China's permanent population was 66.2%, which is still lower than the average of about 80% in developed countries. It is estimated that every 1 percentage point increase in the urbanization rate will boost consumer demand by more than 200 billion yuan.

At present, there are still 170 million migrant workers and their family members who have moved to cities and towns on the mainland. Studies have shown that if these people have urban household registration and enjoy the same basic public services as urban residents, their actual consumption level may increase by about 30%.

Looking at the world, China is still a consumer market with huge room for growth and strong sustainability.

Nicholas Ruddy, a senior researcher at the Peterson Institute for International Economics, recently pointed out in an article on the website of the US bimonthly magazine "Foreign Affairs" that a misconception about China's economic potential is that China's household income, expenditure, and consumer confidence are weak.

"Last year, Chinese household consumption growth outpaced income growth, and if consumer confidence is weak, households will spend less and save more, but Chinese households are doing the opposite. The article says.

The "2024 McKinsey China Auto Consumer Insights" released by McKinsey also pointed out that China's demand for consumption upgrading is obvious, and consumers' willingness and ability to spend in the post-epidemic era have increased, and consumers' attention has continued to shift to medium and high-priced models.

"China's economy is steadily transforming towards a consumption-driven economy. McKinsey & Company's head of consumer goods and retail business in Asia, said that China's retail sales, including goods and services, will increase by 10 trillion yuan in the next five years.

How can the consumption engine be strengthened?

Delivering laundry, cutting hair, drinking a cup of coffee, reading a book, and going downstairs for a walk to get many things done is an important part of the Junmen Community in Gulou District, Fuzhou City, Fujian Province, to promote the construction of a convenient living circle within a quarter of an hour.

"At present, we are building an online convenience service platform in an orderly manner, supporting the opening of online celebrity stores such as Waterfall Bar and Thick Burger, and promoting the upgrading of community services. Lin Dan, Secretary of the Party Committee of the Junmen Community, said.

Studies have shown that more than 50% of the daily consumption expenditure of urban residents is concentrated within 1 kilometer of the community, that is, a 15-minute walk.

Since 2021, the Ministry of Commerce and other departments have jointly promoted the construction of a convenient living circle within a quarter of an hour. This year, more than 70% of cities will be promoted to start the work of convenient living circles, which is expected to create more convenient consumption formats.

In the investigation, the reporter found that the main direction of expanding consumption is to tap the potential inward, increase vitality outward, and promote the formation of a virtuous circle of consumption-guided supply and supply to create demand.

Increasing employment and income is the foundation for enhancing residents' consumption capacity and tapping consumption potential.

Shandong, a major education province, will have 842,000 college graduates in 2024. At the 2024 Shandong Provincial Normal College Graduates Employment Double Selection Conference held recently, more than 300 units recruited talents on the spot.

This year, the national spring recruitment market demand has increased steadily, and more than 36,000 recruitment activities have been held, and more than 29 million jobs have been posted.

China is exploring strong and effective policies to make up for market shortcomings, such as giving tax incentives to enterprises recruiting graduates, and expanding pilot projects for occupational injury protection for employees in new forms of employment, in an effort to stabilize the employment market.

From cross-provincial recruitment, holding the "Spring Breeze Action" special job fair, to intensively releasing new policies to stabilize enterprises and expand jobs, strengthening vocational skills training, and increasing employment assistance for people lifted out of poverty, all localities have gone all out to promote employment and increase income through multiple channels.

To let the people dare to consume, we must not only ensure employment and increase income, but also effectively "reduce the burden".

At present, China is promoting "burden reduction" with greater determination: raising the special additional deduction standard for individual income tax for "one old and one young", launching a new round of affordable housing planning and construction, and further expanding the scope of use of medical insurance funds, etc., to reduce the "worries" of residents' consumption.

Another key point to boost consumption is to optimize the consumption environment and enhance consumption vitality.

Not long ago, the "Wang Po Said Matchmaker" blind date activity launched by the Martial Arts City Scenic Area of Kaifeng Mountain in Henan Province sparked heated discussions on the Internet. The reporter came here a few days ago, you can see street improvisation performances everywhere, the performance areas such as Tiehua and Sanda Zhujiazhuang are full, although "Wang Po" has gotten off work, but "Wang Po Teahouse" is still surrounded by tourists.

Song Tao, the person in charge of the scenic spot, said that the ticket price of the scenic spot is affordable, all performances are free to watch, and the development of tourism products with more martial arts cultural characteristics is being studied, and efforts are being made to make "popular" become "long-term red".

Leaving the scenic spot, the reporter came to the Gulou Tourism and Leisure Block of Kaifeng City. At night, the stalls such as soup dumplings are crowded with people, and the fireworks are full.

"We are digging deep into the cultural heritage of Songdu, taking the Gulou Sightseeing Night Market as a highlight, developing various forms of night market consumption, and at the same time creating a Kaifeng Internet celebrity check-in place to better meet the consumption needs of different groups. Tao Yumin, secretary of the Gulou District Party Committee of Kaifeng City, said.

Through this day's trip to Kaifeng, the reporter deeply felt that the vigorous passenger flow is inseparable from the high-quality consumption environment.

From the perspective of consumption development trends, it is the focus of optimizing the consumption environment at this stage to comply with the new expectations of the people for high-quality life and break through the pain points that restrict consumption.

In this regard, China is taking action:

The "Action Plan for Promoting the Trade-in of Consumer Goods" was issued, proposing 22 measures and measures such as increasing fiscal and financial policy support, improving the recycling network of waste household appliances, and optimizing the home market environment.

Carry out the activity of "sports events into scenic spots, neighborhoods, and business districts" to promote sports, fitness and leisure consumption; Promote the implementation of the "Opinions on Developing the Silver Economy and Improving the Well-being of the Elderly" to stimulate the demand for elderly care; The third batch of Chinese time-honored brands was announced to promote the consumption of domestic "trendy products".

The reporter found that at present, Hebei, Ningxia, Fujian and other places have clearly carried out consumption promotion activities such as automobiles and home appliances, and plan to launch government car purchase subsidies and consumption vouchers to stimulate residents' consumption potential.

Policies are strong, the market is strong, and all parties are working together to promote the continuous recovery of consumption.

"From the perspective of consumption space, service consumption has steadily expanded, and the trend of online and offline integrated consumption has become more obvious; From the perspective of supply capacity, new infrastructure is developing rapidly, and consumption application scenarios are constantly expanding; From the perspective of supporting foundations, the economy continues to recover, employment income grows steadily, and positive changes in consumption are expected to continue. Liu Aihua, spokesman for the National Bureau of Statistics, said. (Reporter Wei Yukun, Fan Yu, Jiang Tingting, Yu Qiongyuan, Han Jianuo)

Source: Xinhua News Agency

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