China’s consumer market is expected to see faster growth in 2022, thanks to the country’s strong consumption potential and more supportive measures in the pipeline.
Last year, final consumption expenditure contributed to 65.4 percent of the country’s economic growth, indicating that consumption was the main driving force pushing the economy forward.
With a country of more than 1.4 billion people, China is the world’s most promising consumer market, with its per capita GDP already exceeding $12,000. “Such a large market means that China is confident in its keeping consumption stable,” said Wang Yun, a researcher with the Chinese Academy of Macroeconomic Research, a think tank under the National Development and Reform Commission.
China’s middle-income population is constantly expanding, while Chinese residents’ incomes are rising at a steady pace. In 2021, residents’ per capita disposable income reached 35,000 yuan (about $5,524.6), up 9.1 percent from the previous year, laying the foundation for greater consumption. Meanwhile, the fundamentals of the Chinese economy, characterized by strong resilience, enormous potential and long-term sustainability, remain unchanged. China is, therefore, well equipped to maintain steady, healthy, and sustainable economic development, which will better support future consumption.
Moreover, China’s regularized COVID-19 containment policies, which are more targeted and science-based, have helped stabilize consumer expectations. For instance, the country’s domestic hospitality industry and housekeeping industry are expected to see stable growth.
“As China has coordinated its COVID-19 response with economic and social development, our business will become booming,” said Wang Lewen, a homestay hotel owner in Yanqing district, Beijing. Wang temporarily closed his hotel in early 2020 due to the local epidemic situation. After constantly adjusting his business model and improving epidemic prevention and control measures, Wang is now doing a brisk homestay business.
Policies to boost consumption are taking effect, underpinning a rebound in consumption across the country. Guanxian county in east China’s Shandong Province held its first e-commerce Lunar New Year’s shopping festival, expanding sales channels for local farm produce and specialties while unleashing the consumption potential of urban and rural areas. During the 14-day shopping festival, the total combined sales for participating enterprises’ exceeded 10 million yuan.
“Last year, Guanxian established a task force to cultivate rural e-commerce talents and help us explore more e-commerce opportunities through favorable policies and e-commerce skills training. As a result, we saw a huge boost in sales,” said Liu Dongtian, general manager of Guanxian Dongyuan Agricultural Produce Co., Ltd.
This year, China’s Ministry of Commerce will firmly implement its strategy of expanding domestic demand, coordinating work on epidemic prevention and control and boosting consumption, in addition to working to promote continued recovery and the upgrading of consumption, according to Xu Xingfeng, an official with the ministry’s Department of Market Operation and Consumption Promotion.
China’s consumer market will embrace broader prospects as long as targeted pro-consumption policies are in good shape, said Chen Lifen, a researcher at the Development Research Center of the State Council.
China will continue to upgrade its traditional consumption sectors. Wang Yun suggested that the country should deepen reforms regarding the circulation of automobiles, encourage household appliance and furniture consumption, and push for service consumption, such as catering, to further boost economic development.
The country will also accelerate new types of consumption. Chen encouraged the development of new business forms and models and new scenarios, as well as new types of consumption, such as the consumption of smart products and tailored products.
China will also step up upgrading urban consumption. The sheer size of urban consumption in the country means that it takes up a large proportion of the overall consumption sector. According to Wang Yun, China needs to speed up the fostering and building of key international consumption cities, accelerate the high-quality development of commercial pedestrian streets, and pilot the building of smart shopping districts and smart stores to provide urban residents with more quality service options.
Moreover, China will address weak links in rural spending, as rural areas boast enormous consumption potential and great prospects. Chen meanwhile suggested that the country needs to advance the construction of a modern logistics system and facilitate the flow of industrial goods into rural areas and the flow of agricultural products to cities.