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Xinhua Silk Road
Economy

Economic Watch: Consumption plays larger role to bolster economy

May 06, 2022


Abstract : Despite multiple challenges, China is working all out to tap its consumption potential, as part of efforts to keep economic fundamentals stable and improve people's lives.

BEIJING, May 5 (Xinhua) -- Despite multiple challenges, China is working all out to tap its consumption potential, as part of efforts to keep economic fundamentals stable and improve people's lives.

Consumption is a primary engine for economic growth in China. In the first quarter, final consumption contributed 69.4 percent to the expansion in the gross domestic product, which rose 4.8 percent year on year.

Retail sales of consumer goods went up 3.3 percent year on year in the first quarter, but dropped 3.5 percent in March, the first decline since August 2020, due to resurgences of COVID-19 cases.

It is high time to let consumption play a larger role in the economic cycle and China should further highlight the importance of consumption in boosting economic growth, said Chen Lifen, a researcher with the Development Research Center of the State Council.

Chinese consumers are relatively more optimistic about the future in sharp contrast to the declining global consumer confidence, said a report published by global consulting firm Ernst & Young (EY).

Approximately 60 percent of Chinese respondents believed their personal finances would improve in the coming year, higher than the global average of 48 percent, according to the latest EY Future Consumer Index report which tracks changing consumer sentiment and behaviors across global markets with 18,000 consumers worldwide surveyed.

China has adopted a slew of policies to counter the impact of COVID-19 and boost the recovery and growth of consumption.

The country in April unveiled guidelines to further tap its consumption potential, with detailed measures to tackle short-term bottlenecks and boost longer-term consumption vitality.

China will develop products and services that cater to the needs of the elderly and infants while encouraging innovations in cultural consumption, the guidelines said.

The country will also tap the consumption potential in the country's vast rural areas, promoting the sales of automobiles and home appliances in these regions.

China also plans to build several duty-free shops within cities and improve related policies to develop pro-consumption platforms.

According to a State Council's Executive Meeting in April, new types of consumption will be promoted. Integration of online and brick-and-mortar consumption will be accelerated, and "smart plus" consumption such as smart products and services will be cultivated and strengthened.

Financial institutions should enhance support for the consumption of big-ticket items and such consumption should be made more available in rural areas to help improve people's lives, according to the meeting.

No new restrictive measures on car purchases shall be set at the sub-national level. Consumption of new-energy vehicles and construction of battery charging facilities will be supported, according to the meeting.

Based on its advantages of a super large market, China should turn to the growth of new technology, new economy and new drivers to buffer external shocks and cyclical downward pressure, said Yang Guangpu, a researcher with the Development Research Center of the State Council.

Despite current setbacks, consumption will further recover and underpin economic growth, as resurgences of COVID-19 cases will ease and the policies will take effect to unleash consumption, experts said, citing the country's great consumption potential and resilience.

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Keyword: consumption

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