Consumption upgrade injects new momentum into China's economy

China Plus Published: 2019-10-08 22:08:49
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Note: The following article is taken from the Chinese-language "Commentaries on International Affairs".

China's week-long National Day holiday this year has set new records for domestic consumption, with sales by the retail and catering sector surpassing 200 billion U.S. dollars, up 8.5 percent on the same time last year, and tourism revenue hit 90 billion U.S. dollars, up almost 8.5 percent.

A night market in Haikou City, Hainan Province, attracts thousands of visitors on Friday, October 4, 2019. [Photo: IC]

A night market in Haikou City, Hainan Province, attracts thousands of visitors on Friday, October 4, 2019. [Photo: IC]

Expenditure on food and shopping by China's consumers is continuing to rise, as is their spending on cultural products. During the National Day holiday, the country's cinema box office takings shot up by more than 80 percent over the takings from last year's holiday to reach around 700 million U.S. dollars. Other cultural attractions, such as museums, also drew big crowds, another part of the services sector that is an increasingly important part of China's consumer market.

Another highlight was the nighttime economy. According to UnionPay, a Chinese bank card association, in the first six days of the week-long holiday, revenue for the catering industry between 10 p.m. to 6 a.m. soared by 55 percent over the same period last year, higher than the average growth of 40 percent achieved across the entire sector.

The ongoing upgrade to China's consumption market is largely driven by a rise in disposable income and greater willingness to spend among China's consumers. In the first half of this year, the country's per capita disposable income stood at around 2,100 U.S. dollars, 6.5 percent higher than last year after adjustment for inflation. China's 400 million middle-income consumers, a group that is continuing to expand, provide strong support for growth in the consumption market. The consumption upgrade is also bolstered by improvements to the quality of goods and services on offer. Last year, investment in research and development by enterprises in China accounted for 70 percent of the country's total R&D investment, and enabled business owners to come up with better products and services.

Policies and measures introduced by China's government in recent years to support improvements in the country's consumption environment and the quality of products on offer, as well as tax reductions to increase the amount of money people have in their wallets to spend, have also played a role. These include the package of measures introduced in August to speed up the development of efficient logistics systems in rural areas, boost demand in the automotive sector, and further stimulate holiday consumption.

Consumption has been the biggest engine driving China's economy forward for the past five years. And in the first six months of this year, consumption contributed 60 percent of the country's economic growth. The boost in consumption achieved during the seven-day holiday provides further evidence that the economy, boosted by domestic consumption, remains resilient despite the rising uncertainties in the global economy.

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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.