Positive signs for China’s consumer goods sector
The increase in the disposable income of the average Chinese worker is expected to boost the country’s consumer goods market in the second half of 2022, despite negative factors including the war in Ukraine and a resurgence in domestic Covid-19 cases.
The National Bureau of Statistics’ (NBS) latest figures show that total retail sales of consumer goods, a vital consumption indicator, reached 3.4 trillion yuan ($533.5 billion) in March 2022, down by 3.5% year-on-year.
In the first quarter of the year, sales reached 10.9 trillion yuan, up 3.3% year-on-year, while the online retail sales rose by 6.6% year-on-year to 3 trillion yuan during the January-March period, the NBS said.
“China’s consumer market is expected to continue its recovery. Although the growth of consumption has been dampened by the latest resurgence of Covid-19 cases in some major cities, its recovery momentum will not change,” said NBS spokesman Fu Linghui.
Fu said consumption has served as the bedrock for China’s stable economic growth, and the final consumption expenditure contributed 69.4% to the country’s economic growth in the first quarter, driving GDP growth by 3.3 percentage points.
He added that consumers’ purchasing power and willingness to spend will be boosted as the Covid-19 outbreak increasingly gets brought under control and the government’s efforts to stabilize and grow the jobs market bear fruit.
Promoting a green agenda
Meanwhile, China “will actively promote sales of electric vehicles as well as green and smart home appliances, bolster the in-depth integration of online and offline consumption, foster new forms and models of consumption, and stimulate consumption in townships and rural areas”, Fu said.
Wang Yun, a researcher with the Academy of Macroeconomic Research, told the China Daily website: “Consumption plays a fundamental role in China’s economic development and is the main driving force boosting economic growth.”
However, he warned that recovery of consumption levels is being held back by mounting challenges, most notably the resurgence in the number of Covid-19 cases, Wang said.
More effort is needed to encourage a higher level of car sales and ease restrictions on home purchases in order to promote recovery and boost economic growth, Wang said.
The Chinese government is to roll out measures to boost consumption, as part of efforts to keep the economy stable and improve people’s livelihoods, according to China’s State Council.
It said that consumption in the services sector, including medical, health, elderly people and child care, should be boosted, adding that spending on home appliances, cars and other big-ticket items will be encouraged.