China’s domestic consumption to continue spiraling up in 2020

  • 时间:2020-09-16

By GLOBAL TIMES        Updated: 2020-09-15 

Wei Jianguo, Vice Chairman of CCIEE

China has released a series of major indicators of economic performance for August on Tuesday, including consumption and fixed-asset investment. According to the data released by the National Bureau of Statistics (NBS), the retail sales have returned to positive growth last month - the first this year.

Despite the COVID-19 outbreak dealt a severe blow on China's economy, China has adopted effective measures to control the damage of the fallout and boost economic recovery, which has been proven by the economic performance in the first seven months.

As data showed that China has managed to recover imports and exports and outbound investments in the first seven months before the release of August's data, the only concern was domestic consumption. Some people were skeptical and pessimistic on whether consumption can meet expectations.

However, as the retail sales data of August is unveiled, the concern has been dismissed. China's retail sales, a major gauge of consumption, rose 0.5 percent year-on-year in August, according to the NBS on Tuesday.

When China's economy shifts gears like a vehicle, it needs time to show results. Although China's retail sales data was down 1.1 percent in July, it should be noticed that the gap has been narrowing for the five consecutive months already. August's data showed that the supporting measures taken by governments at all levels had paid off.

At present, more cities are stepping up efforts to resume business activities, including opening up night market consumption, and removing operational restrictions on cinemas and gyms. These measures will continue to bear fruit.

The consumption growth in August is within anticipation, and the consumption will continue to recover in the fourth quarter and sprint at the end of the year. Following are the reasons. 

For starters, boosting consumption is not just a temporary priority, but also an important step in deepening supply-side reforms and initiating economic internal circulation. As the top troika driving economic growth, consumption will be stressed in coming years during the 14th Five-Year Plan period.

As the US is taking all conceivable measures to contain China's rise, and China has made a strategic decision to initiate internal circulation of the giant economy, increasing consumption will not only solve the current problems of the virus impacts, but also solve the problems of long-term economic development in the future.

Secondly, China can take measures to further promote consumption, for instance, by expanding the scale of government procurement, creating non-subsidized incentive levers, and setting up more import duty-free shops.

Meanwhile, priority should be given to the development of education, childcare, elderly care, medical care, culture, tourism and other service industries in order to accelerate the pace of consumption upgrade. For example, making full use of 5G will accelerate the pace of intelligent transformation of manufacturing enterprises.

After COVID-19, China will lead the global consumer market. China's middle-income group has reached 400 million, more than the total population of the US, and its purchasing power will become the most important consumer power for China's economic development.

Moreover, the impact of COVID-19 is also the best opportunity for China to carry out a "new consumer revolution," which can facilitate consumption through making use of new technologies like mobile payment, big data, cloud computing, Internet of Things, and smart logistics. 

At the same time, it is necessary to further promote the regionalization and internationalization of consumption, that is, to develop cross-border e-commerce services, bring China's e-commerce services and new consumer revolution to the world.

It's believed that consumption in the Chinese market in 2020 will still be the biggest driving force for China's economic growth, and it is also an important step in starting the economic internal cycle.