Consumption maintains healthy momentum

Updated: Apr 8, 2024 By Yi Shaohua and Song Yuru China Daily Print
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A consumer shops at an automated self-service FamilyMart store in Shanghai in June 2022. [Photo/China Daily]

China's consumption sector got off to a good start in 2024, showcasing the country's huge potential and underscoring growing spending appetites among households, official data showed.

As a supersized economy, China possesses substantial consumption potential, high demand and market vitality. These factors not only promise further growth and expansion of household spending, but also provide a solid foundation for advancing the high-quality development of the country's economy. Most importantly, they serve as a reliable confidence booster for sustained economic progress over the long run.

The cheery beginning to the year helps build on a consumption recovery witnessed last year, said the National Bureau of Statistics. Total retail sales of consumer goods reached 47 trillion yuan ($6.5 trillion) last year, marking a 7.2 percent increase from the previous year and a significant 15.6 percent rise compared to the same period in pre-pandemic 2019.

The contribution rate of final consumer spending to economic growth also reached 82.5 percent, driving GDP growth by 4.3 percentage points, which all showed that the fundamental role of consumption in driving economic growth has been further enhanced.

First, the basic consumer goods market. The sector has consistently maintained a high growth rate, leading to the continuous expansion of consumption activity.

In 2023, the total consumption of grains, edible oils, foodstuffs, beverages, tobacco and alcohol increased greatly. Total purchases of clothing, shoes, hats and knitted textiles soared 10.9 percent year-on-year, while the buying of gold, silver and jewelry increased 13.3 percent.

Looking at 2024, data from the Ministry of Commerce showed that during the Chinese New Year holiday, sales of key retail and catering companies across the country increased 11 percent year-on-year.

Sales of gold, silver and other jewelry; sports and entertainment-related goods and services; and telecommunication equipment increased by 23.8 percent, 15.6 percent, and 10.4 percent, respectively, year-on-year.

Sales during an annual online shopping festival, from Jan 18 to Feb 17, hit approximately 1.2 trillion yuan, which is a nearly 9 percent rise compared with a year earlier.

These are all positive indicators that mark a strong start to the year and emphasize the vast potential of the country's consumer market.

Second, the scale of services consumption continues to expand and has become a new engine driving consumption growth.

Since 2023, services consumption has shown a rapid rise. Annual retail sales of services consumption last year increased 20 percent year-on-year, which is 14.2 percentage points higher than the growth rate of commodity retail sales.

Catering consumption has grown significantly, with catering revenue reaching 5.29 billion yuan throughout the year, a year-on-year increase of 20 percent. During the Spring Festival holiday, the national average daily sales revenue of catering services increased 31.5 percent year-on-year.

In addition, entertainment and tourism consumption have shown explosive growth. During the New Year's Day holiday, more than 135 million people traveled nationwide, driving domestic tourism revenue to reach 79.73 billion yuan, more than double compared with the previous year.

During the eight-day Spring Festival holiday, the number of domestic tourists reached 474 million, a year-on-year increase of 34.3 percent. The total domestic tourism expenditure was 632.69 billion yuan, a year-on-year increase of 47.3 percent.

Box office performance was also strong, with domestic box office receipts during the holiday exceeding 1.5 billion yuan, 2.7 times that of the previous year.

As households' living standards improve and individuals strive to enhance their quality of life, services consumption is thriving.

Third, green, healthy and smart consumption remain hot topics, unleashing more potential demand.

As technological breakthroughs and living standards improve, the importance of health and environmental protection becomes more firmly ingrained in society. Consequently, demand for green consumer products is on the rise.

Smart homes are now integrating various features like artificial intelligence, the internet of things and everyday necessities, enhancing the convenience, safety and energy efficiency of family life.

As a result, smart home appliances have gained popularity among consumers. In 2023, the value of the country's smart home market reached 7.16 trillion yuan. Additionally, sales of green and healthy products are thriving in consumption promotion activities organized by various entities.

During the Spring Festival holiday this year, the Ministry of Commerce said that sales of instant retailing on e-commerce platforms surged, as did purchases of green and organic foods in some large supermarket chains.

The data reflects the role of the "holiday economy" in driving green and healthy consumption, while highlighting the increasing potential for expanded consumption of green products.

Fourth, new consumption patterns and scenarios are rapidly evolving, further growing the potential of the consumer market.

Driven by the new generation of information technology, consumer carriers or platforms continue to innovate with various business patterns and consumption scenarios around different themes and geographical spaces.

Since 2023, many new consumption spots have emerged. For instance, in the summer, Zibo, Shandong province gained popularity for its barbecue offerings, sparking a nationwide tourism craze. Similarly, during the winter, Harbin, capital of Heilongjiang province, garnered attention through online platforms due to its captivating ice and snow activities.

During the 2024 New Year's Day holiday which began on Dec 21, 2023, Harbin is reported to have ushered in 3.05 million tourists and generated revenue of 5.91 billion yuan, the most in its history.

Simultaneously, major brands and intellectual properties, or IPs, have initiated collaborations, leading to the emergence of numerous popular consumer IPs.

For example, coffee brand Luckin cooperated with Korean sticker memes Line Puppy and jointly launched new products and peripheral products on Aug 22 — Chinese Valentine's Day — last year.

Milk tea chain Heytea and Korean cartoon Loopy also launched new products and limited peripheral products during the Christmas season.

Notably, various cities across the country, including Beijing, Shanghai and Chongqing, have made efforts to build themselves into international consumption cities, by driving new patterns like hotpot festivals and night economies.

Rural consumption also experienced a recovery and surged as many individuals returned to their hometowns during the Spring Festival holiday. This influx of people sparked increased activity in catering, tourism and demand for agricultural products in rural areas.

The Ministry of Commerce said online retail sales in rural areas witnessed a year-on-year increase of 16.1 percent during the Spring Festival holiday. This trend exemplifies the synchronized progress of consumption in both urban and rural areas, as they advance hand-in-hand.

The authors are researchers from the National Academy of Economic Strategy under the Chinese Academy of Social Sciences.

The views don't necessarily reflect those of China Daily.

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