Unleashing consumption potential in spring
The weeklong Spring Festival, or the Chinese Lunar New Year holiday, which this year began on Jan 31 and lasted till Sunday, is not only an important occasion for family reunions but also a peak season for consumption.
China's consumer market is expected to see recovery of growth this year－the "Year of the Tiger", the third one in the 12-year Chinese zodiac cycle－with the COVID-19 pandemic increasingly coming under better control and more supportive measures in the pipeline, industry experts said.
They underlined that online shopping has injected new impetus into China's consumption growth and helped enhance the resilience of the real economy.
"Consumption plays a fundamental role in China's economic development and is the main driving force boosting economic growth," said Wang Yun, a researcher with the Academy of Macroeconomic Research.
Although concrete figures are yet to emerge for this year's holiday sales, consumer spending during the Chinese Lunar New Year holiday is expected to return to the pre-pandemic level or witness a slight increase, spurred by online shopping festivals held by e-commerce platforms and innovation in commodity supplies like time-honored brands and precooked cuisine, Wang said before Spring Festival, the most important holiday for Chinese people.
The sporadic COVID-19 outbreaks in several parts of the country have had a limited impact on consumer buying behavior, Wang said, adding high-quality brands and products are gaining traction among Chinese consumers.
Major online retailers launched a series of promotional events and distributed shopping coupons in the run-up to the Spring Festival holiday, in an attempt to boost consumption.
Chinese e-commerce giant JD said sales of tiger-themed products, including jewelry, gold ornaments, cosmetics, perfume, clothing and toys, sold very well since December. Consumption related to winter sports comes into spotlight this year, as sales of skiing and ice skating equipment, like suits, snow boots, gloves, caps and goggles, have witnessed robust growth triggered by the Beijing 2022 Winter Olympics, which opened on Friday and will close on Feb 20, JD said.
Consumers also favored indoor fitness equipment like Nintendo's handheld gaming consoles Switch, treadmills and smart wristwatches that record calories burned, heart rate changes and the running distance.
The number of orders sent to another city rose by 30 percent year-on-year during the first week since JD's Spring Festival promotion gala kicked off on Jan 9, as many young urbanites decided to stay in the city where they work this year due to the pandemic and buy gifts online for their parents living in other cities, JD said.
Generation Z－people born between mid-1990s and the early 2010s－prefer buying smartphones, digital electronics, local specialties and healthcare products for their family members.
Sales of air fryers, toasters, electric ovens and coffee makers increased by more than 10 times year-on-year from Jan 7 to 23, according to JD Daojia, the local on-demand retail platform of Dada Group.
People spent more time with their friends during the Spring Festival holiday. Sales of Polaroid cameras increased by 10 times and that of projectors rose sixfold on JD Daojia, while gaming notebooks, tablet computers and smart speakers increased by more than three times.
In January, the National Development and Reform Commission released a notice aimed at boosting consumption during traditional Chinese holidays, such as Spring Festival and Lantern Festival, while maintaining precise COVID-19 control.
The notice was issued to cater to residents' growing consumption demand and further unleash the potential of the domestic market, as part of efforts to propel the economy to achieve a stable start in the first quarter, according to the NDRC.
Multiple measures should be taken to meet residents' festive needs, including ensuring the supply of daily necessities and providing more contactless services, the notice said. The NDRC also adopted measures to upgrade online festival consumption and expand consumption in rural areas.
It called for measures to promote new energy vehicles and smart home appliances in rural areas while strengthening logistics and distribution networks. In addition, consumption related to the winter sports industry, as well as culture and entertainment, should be promoted, the notice said.
Consumption is playing an increasingly vital role in bolstering high-quality development of the world's second-largest economy and the Chinese Lunar New Year holiday provided an outlet to release consumers' pent-up demand, experts said.
Data from the National Bureau of Statistics showed that China's retail sales of consumer goods, a vital consumption indicator, reached 44.08 trillion yuan ($6.95 trillion) in 2021, up 12.5 percent, with an average two-year (2020 and 2021) growth of 3.9 percent.
In December, however, total retail sales of consumer goods increased by 1.7 percent year-on-year but dropped 0.18 percent month-on-month, indicating pressure exerted by demand contraction.
China's economic work in 2022 should prioritize stability of growth while pursuing progress, said the tone-setting Central Economic Work Conference in December.
The meeting cautioned that China's economic development is facing pressure from demand contraction, supply shocks and weakening expectations, and the external environment is becoming increasingly complicated, grim and uncertain.
Wang from the Academy of Macroeconomic Research said she is optimistic the consumption will maintain a growth momentum this year along with rising per capita disposable incomes and consumption expenditure of Chinese residents.
She also said total retail sales of consumer goods are expected to grow 7 to 8 percent this calendar year.
China's per capita disposable income stood at 35,128 yuan in 2021, up 9.1 percent year-on-year in nominal terms, the NBS said. After deducting price factors, the figure was up 8.1 percent from the previous year.
In addition, the per capita consumption expenditure came in at 24,100 yuan last year, an increase of 13.6 percent from the previous year in nominal terms and 12.6 percent in real terms.
Wang's views were echoed by Liu Xiangdong, a researcher with the China Center for International Economic Exchanges. Liu said consumption, as a significant pillar of economic development, is expected to maintain growth this year despite challenges brought by the COVID-19 pandemic.
Liu said a series of measures like giving out shopping coupons should be taken to further unleash consumption potential. More supportive policies will be formulated to boost employment, increase residents' income and enhance their purchasing power, Liu said.
Jin Xiandong, a spokesperson for the NDRC, said China will continue to expand domestic demand on the basis of effective prevention and control of COVID-19, deepen the supply-side structural reform and unleash consumption potential.
Final consumption expenditure contributed 65.4 percent of China's economic growth in 2021, driving GDP growth by 5.3 percentage points, Jin said.
The country will promote green consumption, bolster the integration of online and offline shopping, and accelerate e-commerce and logistics systems in rural areas, he said.
The post-90s generation is emerging as the mainstream consumers, and there was a spike in orders for precooked dishes, smart home appliances and nutrition and healthcare products, according to Tmall, the business-to-customer e-marketplace operated by Alibaba.
Bai Ming, deputy director of the international market research department at the Chinese Academy of International Trade and Economic Cooperation, said younger generations are becoming the driving force in the growth of homegrown brands due to their higher disposable incomes, as well as personalized and diversified demand.
A report released by consulting firm McKinsey& Company said China will continue to be the engine that powers global consumption growth.
Chinese consumers are taking the lead in terms of the acceptance of new technologies and demographic and consumer behavior changes. These changes are likely to reshape the global consumption market, the report said.
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