Consumption spurs recovery and growth
China's retail and services sectors are gradually recovering and gaining growth momentum, fueled by better containment of the COVID-19 pandemic and a slew of stimulus measures to spur consumption taking effect, industry experts said.
Their comments came after data from the National Bureau of Statistics showed retail sales of consumer goods, a significant indicator of China's consumption strength, went up 3.1 percent year-on-year to 3.87 trillion yuan ($572.4 billion) in June, compared with a 6.7 percent decline in May.
In the first half of this year, retail sales stood at 21.04 trillion yuan, down by 0.7 percent on a yearly basis, said the NBS. In addition, the added value of the services sector grew by 1.8 percent year-on-year in the first six months, while the index of services production in June shifted from a decline to an increase of 1.3 percent.
"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.
With the pandemic being contained more effectively and several supportive policies to shore up consumption, China's consumer market is expected to gather growth momentum in the second half and recover from the fallout of COVID-19, Wang said.
She estimated that spending on big-ticket items and service-related consumption will see a strong rebound in the second half of the year.
To further unleash consumption potential and keep major economic indicators within an appropriate range, the country has rolled out a series of detailed measures, including boosting sales of automobiles, home appliances, and other big-ticket items.
The government has halved the car-purchase tax for passenger vehicles with 2-liter engines or smaller and priced at no more than 300,000 yuan effective from June 1 to the end of the year. Some 1.1 million cars enjoyed China's car-purchase tax cut during the first month of the policy's implementation, saving about 7.1 billion yuan for car buyers, said the State Taxation Administration.
"The introduction of a raft of stimulus measures to spur consumption plays a significant role in stimulating consumers' purchasing appetites, promoting the recovery of consumption and stabilizing economic performance," Wang said.
Local governments have also accelerated steps to hand out consumption vouchers. For instance, Zhengzhou, the capital of Henan province, has announced a massive voucher giveaway worth 240 million yuan from late May to August.
Zhao Ping, deputy head of the Beijing-based Academy of China Council for the Promotion of International Trade, called for efforts to encourage enterprises to leverage new-generation information technologies like big data, cloud computing and artificial intelligence to create new types of green and intelligent consumer goods, and cultivate new consumption growth points.
Zhao estimated China's consumer market is likely to see a recovery of growth this year, on the back of income increases of Chinese residents, continuous recovery of industrial and supply chains, as well as a package of supportive policies to shore up consumption.
More push is also needed to further cut taxes and fees to help micro, small and medium-sized enterprises, and self-employed individuals hit hard by the pandemic to overcome difficulties, expand employment, increase residents' incomes and ensure the smooth operation of logistics and supply chains to further perk up consumption, she added.
In the long run, fully tapping consumption potential and upgrading the channels and services in lower-tier cities and rural areas will remain key measures to fuel the recovery of consumption in China, said Zhang Xun, managing director of Accenture Strategy& Consulting Greater China, adding he is upbeat about the medium and long-term development of the country's consumption market.
