Inland boost for domestic consumption

Anhui, Yunnan and Jiangxi provinces lead peers with impressive rates of 11%

Three inland provinces were the mainstay of rising domestic consumption in China during the first three months of this year and the momentum is set to continue on the back of friendly policies, tax reforms and steps to boost innovation, officials said.

Anhui, Yunnan and Jiangxi provinces were the mainstay of the domestic consumption rise, with annual growth rates of 11.1 percent between January and March this year, according to data from the National Bureau of Statistics.

China's total consumption amounted to 9.78 trillion yuan ($1.45 trillion) during the first quarter, up 8.3 percent year-on-year. Only two coastal provinces, Zhejiang and Fujian, figured in the Top 10 regions in terms of consumption. Beijing, Shanghai, and Guangdong－home to the two top-tier cities of Guangzhou and Shenzhen, all failed to make it to the Top 10 list during this period.

"The policies to reduce taxes and fees have started bearing fruit since the start of this year along with the efforts to stimulate and upgrade consumption, and provided steady growth momentum," said Zhang Yuanqin, an official with Anhui province's department of commerce.

"But there are still shortcomings with the Anhui consumption market, like unbalanced development," Zhang said. "The next step is to further push the consumption upgrade, optimize the urban consumption structure, accelerate the development of service industry, develop e-commerce and optimize the business environment."

The population size in top-tier cities is relatively stable and the growth rate is not high. Even though Beijing has experienced a permanent population growth in recent years, there is not much pulling power on physical consumption, said Yang Chang, a senior economist with Zhongtai Securities.

In addition, Yang said the consumption expenditure has divided into two parts－physical consumption such as clothing, food and other daily necessities, and service consumption including entertainment and other virtual consumption measures.

"The total retail sales of social consumer goods count as physical consumption, and the proportion of service consumption in first-tier cities such as Beijing and Shanghai is larger. Therefore, it is not surprising that the growth rate of retail sales of consumer goods in first-tier cities remained low," he said.

The lower housing prices in many lower-tier cities have also pushed consumers, in particular the millennials, to spend more on products and services such as healthcare, fashion, jewelry, dairy and agricultural products, digital household appliances and science and technology services, said Guo Xin, a marketing professor at Beijing Technology and Business University.

Growth trends will come to the fore as China's consumption economy becomes more sophisticated and diversified, said Guo.

"The consumption performance in the first quarter is better than expected," said Zhao Ping, head of international commerce of the Academy of China Council for the Promotion of International Trade. "The pace of consumption upgrade is accelerating, especially in the service side."

Tianjin, a municipality near Beijing, was the only one on the list that showed negative growth of 2.6 percent year-on-year during the period.

The city's bureau of statistics said in a statement that the city's business environment has been facing uncertainties, and in the future, it will offer more policies to maintain sustainable economic development.