Consumption upgrade injects new momentum into China's economy
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]
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.