Expert Interpretation | Cultivate new growth points for service consumption and help the economy grow steadily

Yesterday, the Beijing Municipal Development and Reform Commission held a press conference on economic and social development in the first quarter. Today, let's listen to Liu Zuoli, director of the Institute of Strategic Planning of the Beijing Academy of Economic and Social Development, on Beijing's service consumption sector. Come and find out -

Since the beginning of this year, Beijing has continued to deepen the construction of an international consumption center city and promote the upgrading of consumption quality. In the first quarter, market consumption continued to recover, and the city's total market consumption increased by 5.8 percent year-on-year, of which service consumption grew rapidly, with consumption increasing by 12 percent, 6.1 percentage points higher than that of the same period last year, and also at a high level in the same period in the past five years. The data shows that in the first quarter, the per capita cultural and entertainment service expenditure of the city's residents increased by 75% year-on-year, and the per capita group tourism expenditure increased by 1.6 times year-on-year; Meituan data shows that the scale of cultural and tourism consumption in Beijing during the Spring Festival holiday in 2024 increased by more than 97% year-on-year, and the number of cultural and tourism orders in Beijing during the Qingming holiday (including scenic spots, accommodation, transportation, etc.) increased by more than 170% year-on-year.

The following focuses on the analysis of consumption laws and trends, and talks about several understandings and thoughts on cultivating the potential areas of service consumption and stimulating economic growth.

First of all, the rapid growth of service consumption is not only due to the strong demand generated by residents' yearning for a better life, but also a reflection of the law of economic growth.

From the perspective of residents' demand and consumption trends: with the continuous improvement of residents' income level, the scale of middle-income groups continues to expand, and consumers' demand for services that provide high emotional value and experience is increasing, and the consumption of cultural tourism, health, science and technology, green and other services has become a new growth point. According to the data released by the China Performance Industry Association, in the first quarter of this year, the national performance market started well, the core value of the deep integration of culture and tourism is gradually being released, and the performance market as a whole is still in the expansion cycle, with a good start in the three dimensions of performances, box office and number of spectators, an increase of 73%, 117% and 78% respectively over the same period last year, and the demand from the masses is strong.

From the perspective of the law and trend of economic growth, consumption is the final demand, the key link and important engine for smoothing the economic cycle and expanding domestic demand, and has a lasting driving force for the economy. From the perspective of the law of development, along with the improvement of the level of economic development, economic growth will be mainly driven by final consumption, especially household consumption; the upgrading of residents' consumption structure will be carried out according to the path of "clothing, food, housing, transportation, and recreation", and service consumption will represent the ultimate trend of consumption upgrading. When the per capita GDP exceeds 10,000 US dollars, the demand for residents' service consumption will increase significantly, and when the per capita GDP reaches 15,000 US dollars, service consumption will become the dominant consumption (the proportion of service consumption in final consumption in major developed countries is generally around 60%, compared with 65% in the United States in 2022; and the proportion of service consumption in global cities such as New York, London, and Tokyo is generally at the level of 70%-80%). At present, Beijing's per capita GDP is close to 30,000 US dollars, and its economic growth has become the "first engine" of economic growth after being led by consumption and investment alternately, and after being driven by investment and consumption, consumption has become the "first engine" of economic growth.

In addition, service consumption has a strong driving effect and is an important engine for stimulating urban consumption and promoting economic growth.

With the continuous upgrading of residents' consumption and the increasing abundance of service consumption scenarios, service consumption will become the main body to stimulate potential consumption. Tapping the potential of new growth points of service consumption can not only promote the sustained and stable growth of service consumption, but also to a large extent drive the heating up of commodity consumption, expand profitable investment, and promote the improvement of the quantity and efficiency of service trade. The main points are three areas in which Beijing has advantages and conditions to exert its strength.

First, large-scale activities such as exhibitions, cultural tourism, and events. Take concerts as an example: as an important vane of the cultural tourism performance market, and as a typical diversified format of cultural, commercial and tourism integration, concerts have become an important force for gathering popularity, showing cultural and commercial spirit, and also polishing the "traffic password" of the city's cultural business card. According to the "2023 Annual Insights on Large-scale Concerts in the Performance Market", "going to a city for a concert" has become a new travel choice for young consumers, and the proportion of large-scale concerts across cities across the country is as high as 68% (65% in the city), an increase of 7.4 percentage points over 2019. The integration of culture, business and tourism has a significant "leverage effect", driving the related demand for transportation, accommodation, catering, and retail, creating "real money" for the city. This year's Taylor Swift concert in Singapore, which exploded globally, generated S$300 million to 400 million in Singapore's revenue, accounting for about 0.2% of Singapore's GDP in the first quarter, driving GDP growth (2.7% year-on-year) to a six-quarter high in the context of sluggish growth in manufacturing and other industries (0.8% year-on-year). Looking forward to the future, it is recommended to follow the trend of consumption upgrading, take the initiative to plan and hold a number of large-scale exhibitions, commercial performances, sports events, etc., pay attention to resource integration, link the overall planning of scenic spots, hotels, catering, shopping, transportation, etc., cultivate new business formats for the integration of business, culture and tourism, amplify the leverage effect, improve the consumption level, stimulate economic growth, and empower the high-quality development of the capital.

The second is inbound tourism. Inbound tourism is an important starting point for promoting service consumption and promoting the development of service trade, and is an important means to highlight the city's charm and international influence. Focusing on the difficulties in payment, the city took the lead in the country to complete the increase in the quota of foreign card binding business, and took the lead in opening up the channel for providing free passport information verification to banks at the provincial level, driving a good recovery of inbound tourism. In the first quarter, the city received 3.1 times the year-on-year increase in inbound tourists (including Switzerland, Ireland, Hungary, Austria, Belgium and Luxembourg, which implemented the new visa-free policy, and the number of tourists to Beijing increased by nearly 5 times year-on-year), achieving a year-on-year increase of 226% in tourism foreign exchange income. Looking ahead, it is recommended to strengthen the linkage between departments, strengthen the promotion and publicity of overseas markets in the short term, enhance the willingness of tourists to come to Beijing, promote the resumption of international flights as soon as possible, and improve the convenience of tourists coming to Beijing.

The third is the expectation of the masses such as "old people" and "small children". Strengthen the overall planning of medical and health care, implement the transformation for the elderly, improve the birth support policy, and take the opportunity of the pilot construction of embedded service facilities in urban communities to continuously strengthen service capabilities, increase high-quality supply, enrich consumption scenarios, and do a solid job in people's livelihood.

In addition, it is also necessary to seize the opportunities of digital, technology, and green to empower cities and lives, lead the new fashion of consumption, strengthen the production and promotion of AI intelligent terminals, plan to launch new popular products of consumer electronics, and grasp the implementation of major policies such as large-scale equipment renewal and trade-in of consumer goods, so as to stimulate consumption.