Robust holiday consumption signifies steady upward trend in China’s economy

China Plus Published: 2019-02-11 21:37:14
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Note: The following is an edited translation of a commentary from the Chinese-language "Commentaries on International Affairs."

China's consumption during the Spring Festival holiday has achieved remarkable growth, despite a slowing economy.

Newly released statistics show over 400 million domestic trips were made during the week-long Lunar New Year holiday this year, an increase of 7.6 percent from the same period last year. Domestic tourism generated revenue of $76 billion, an annual increase of over 8 percent. Combined sales of retail and catering companies achieved annualized growth of 8.5 percent, reaching a new high of about $150 billion. This robust growth reflects the huge potential of China's consumer market.

As the world's most populous country of nearly 1.4 billion people, China's spending on consumption contributed 76 percent to overall economic growth in 2018, with its Engel's Coefficient -- the proportion of money spent on food and household expenses -- down 0.9 percentage points annually. This indicates an upgrade in Chinese consumption. And that's why imported goods and high-tech products have become increasingly popular in Chinese New Year shopping baskets, and why domestic and international travel has been favored more and more by people living in third and fourth-tier cities.

Combined sales of retail and catering companies achieved an annual growth of 8.5 percent during the Lunar New Year holiday, reaching a new high of about $150 billion. [Photo: VCG]

Combined sales of retail and catering companies achieved an annual growth of 8.5 percent during the Lunar New Year holiday, reaching a new high of about $150 billion. [Photo: VCG]

The upgrade in Chinese consumption habits offers greater opportunities for global companies, such as Starbucks and L'Oreal. Starbucks now has roughly 3,700 stores in nearly 160 cities in China, up 18 percent from a year ago. And L'Oreal just posted its strongest sales growth in more than a decade thanks to strong demand in the Chinese market. CEO of the French cosmetics giant, Jean-Paul Agon, has said he is not concerned about the possibility of a slowdown in the Chinese economy, suggesting his company expects demand among Chinese people for their products will continue in 2019.

Echoing Agon's positive view is the Bank of America-Merrill Lynch China Activity Coincident Tracker, which attempts to measure economic activity in the country by synthesizing data from such economic markers as electricity production, exports, and retail sales. The tracker released in January rose 4.1 percent year-over-year, up from 3 percent in November.

China's economic growth slowed to a three-decade low of 6.6 percent last year, but remained at the forefront of the world's major economies. China's contribution to global economic growth last year exceeded 30 percent, remaining the biggest contributor. The newly released figures on Chinese consumption during the Lunar New Year holiday once again prove that the fundamentals of China's steady economic development have not changed, and that the overall momentum of sustainable growth has not changed. China will remain a powerful engine for continuing to motivate global economic growth.

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LU Xiankun Professor LU Xiankun is Managing Director of LEDECO Geneva and Associate Partner of IDEAS Centre Geneva. He is Emeritus Professor of China Institute for WTO Studies of the University of International Business and Economics (UIBE) and Wuhan University (WHU) of China and visiting professor or senior research fellow of some other universities and think tanks in China and Europe. He also sits in management of some international business associations and companies, including as Senior Vice President of Shenzhen UEB Technology LTD., a leading e-commerce company of China. Previously, Mr. LU was senior official of Chinese Ministry of Commerce and senior diplomat posted in Europe, including in Geneva as Counsellor and Head of Division of the Permanent Mission of China to the WTO and in Brussels as Commercial Secretary of the Permanent Mission of China to the EU. Benjamin Cavender Benjamin Cavender is a Shanghai based consultant with more than 11 years of experience helping companies understand consumer behavior and develop go to market strategies for China. He is a frequent speaker on economic and consumer trends in China and is often featured on CNBC, Bloomberg, and Channel News Asia. Sara Hsu Sara Hsu is an associate professor from the State University of New York at New Paltz. She is a regular commentator on Chinese economy. Xu Qinduo Xu Qinduo is CRI's former chief correspondent to Washington DC, the United States. He works as the producer, host and commentator for TODAY, a flagship talk show on current affairs. Mr. Xu contributes regularly to English-language newspapers including Shenzhen Daily and Global Times as well as Chinese-language radio and TV services. Lin Shaowen A radio person, Mr. Lin Shaowen is strongly interested in international relations and Chinese politics. As China is quite often misunderstood in the rest of the world, he feels the need to better present the true picture of the country, the policies and meanings. So he talks a lot and is often seen debating. Then friends find a critical Lin Shaowen criticizing and criticized. George N. Tzogopoulos Dr George N. Tzogopoulos is an expert in media and politics/international relations as well as Chinese affairs. He is Senior Research Fellow at the Centre International de Européenne (CIFE) and Visiting Lecturer at the European Institute affiliated with it and is teaching international relations at the Department of Law of the Democritus University of Thrace. George is the author of two books: US Foreign Policy in the European Media: Framing the Rise and Fall of Neoconservatism (IB TAURIS) and The Greek Crisis in the Media: Stereotyping in the International Press (Ashgate) as well as the founder of, an institutional partner of CRI Greek. David Morris David Morris is the Pacific Islands Trade and Investment Commissioner in China, a former Australian diplomat and senior political adviser. Harvey Dzodin After a distinguished career in the US government and American media Dr. Harvey Dzodin is now a Beijing-based freelance columnist for several media outlets. While living in Beijing, he has published over 200 columns with an emphasis on arts, culture and the Belt & Road initiative. He is also a sought-after speaker and advisor in China and abroad. He currently serves as Nonresident Research Fellow of the think tank Center for China and Globalization and Senior Advisor of Tsinghua University National Image Research Center specializing in city branding. Dr. Dzodin was a political appointee of President Jimmy Carter and served as lawyer to a presidential commission. Upon the nomination of the White House and the US State Department he served at the United Nations Office in Vienna, Austria. He was Director and Vice President of the ABC Television in New York for more than two decades.