Consumption registers strong growth in Q3

China's consumption remained strong in the third quarter, fueled by the stable economic environment, data from market measurement and data analytics company Neilson showed.

The CTI (consumer trend index), an index measuring China's consumption trend, remained at a high level in the third quarter of 2019, standing at 114 points. Overall, the stable running of national economy within a reasonable range laid a sound foundation for the health of CTI.

According to Neilson's report, the CTI measures three perceptions, namely local job prospects, personal finance and willingness to spend. The job prospects, at 78 point, were up by one point from the second quarter. The other two components: personal finance and willingness to spend more or less remained unchanged registering 70 and 61 respectively.

Justin Sargent, president of Neilson China, said: "China's continuously ongoing supply-side structural reform and implementation of tax and fee cut policy has created a sound policy environment for China's stable economic development."

Such an encouraging environment incentivizes consumers to spend and supports private enterprises and constantly stimulates the vigor and dynamism of national economy.

Analyses of CTI from different tiers show that the first- and second-tier cities saw an increase of 7 and 8 points year-on-year to 114 points and 119 points respectively.

The third-tier city in particular saw the most significant increase of 10 to 121 points. This trend is clear-cut in the three factors of CTI, as the job prospects, personal finance and willingness to spend are higher or leveled compared with the first- or second-tier cities.

This sends out a positive signal to the market as the willingness to spend and economic conditions in third-tier cities are expanding.

The number of consumers from third-tier or lower-tier cities is increasing. This can be part of the result of urbanization. More people who lived in rural areas before have migrated to cities. In this way more jobs will be taken and as the payroll increases, there is more room for them to make the purchase. Continued urbanization unleashes the potential of new urban resident consumers especially the young. Young people living in third-tier cities have handsome disposal income and are looking for something new, and something to lift their life quality and their living environment.

They are more aspired to follow the latest trend and fashion and they are also the easy target for celebrity-endorsed products. In Sargent' point of view, as the change of consumption concept and consumption upgrading will continue, the third-tier cities' consumption potential is far from being fully tapped. Only if producers, whether local or internationally operated, take steps, grasp and stimulate purchase, can they seize the opportunity and seek sizable margins.

Zheng Hao contributed to this story.