The role of the "main engine" of consumption is further highlighted (in a new economic direction)

This summer, the Red Culture Special Train is launched, bringing new opportunities to Jinggangshan, Jiangxi. "Up to now, over 20000 passengers have taken special trains to Jinggangshan, driving up local tourism revenue," said Luo Chenyuan, director of the Jinggangshan Municipal Bureau of Culture, Radio, Television, and News.

Recently, the "Love Car Nanshan Purchase" automobile special promotion activity in Nanshan District, Shenzhen, Guangdong Province has officially begun. "The charging stations in the community are fully equipped, and there are also consumption vouchers for purchasing cars. Buying new energy vehicles is cost-effective," said Wu Qingyou, a resident of Nanshan District.

In the first seven months, the total retail sales of consumer goods in China increased by 7.3% year-on-year, while the retail sales of services increased by 20.3% year-on-year. Domestic demand continued to expand, helping to maintain stable recovery of the national economy. What is the next step in restoring and expanding consumption? How should relevant policies be implemented? The reporter interviewed relevant experts.

Consumer upgrading presents many highlights

"In the first half of the year, the contribution rate of China's final consumption expenditure to economic growth reached 77.2%, which is significantly higher than the full year of 2022 and also significantly higher than the first quarter of this year. The role of consumption as the 'main engine' of economic growth is further highlighted," said Li Qingbin, a researcher at the Institute of Economics at the China Academy of Macroeconomics.

Travel has become even busier. With the continuous increase of summer tourism passenger flow, the demand for railway travel is very strong. From July 1st to August 21st, the total number of passengers sent by railways in China was 701 million, of which 15.686 million were sent on August 19th, setting a new historical high in the daily passenger volume of summer transportation.

Tourism has become even more popular. The consumption heat index based on Meituan order data shows that from July 1st to 25th, the average consumption heat index of the tourism industry reached 204.3, indicating that the scale of tourism orders has exceeded twice that of the same period last year.

Yang Daoling, Director of the Big Data Analysis Department of the National Information Center's Big Data Development Department, told reporters that the monitoring and analysis of 280 million high-frequency data such as online consumption, search behavior, enterprise registration, and performance box office shows that with the arrival of summer, cultural and tourism consumption continues to be hot in the first half of the year, consumer enthusiasm for traveling and watching movies continues to rise, and market vitality in related fields is accelerating.

"With the stable transition of epidemic prevention and control, consumption scenarios such as catering, travel, tourism, and cultural entertainment have rapidly recovered, and contact based aggregation service consumption has strongly recovered. Many areas have basically recovered or even exceeded pre epidemic levels." Li Qingbin believes.

At the same time as the obvious recovery of contact based aggregation service consumption, the upgrading of physical consumption has also shown many highlights.

"In the first half of the year, the retail sales of cosmetics, gold, silver, and jewelry by units above the quota increased by 8.6% and 17.5% year-on-year, respectively, with obvious upgrading characteristics. Moreover, the growth rates of these two types of goods in rural markets were 7.5 and 21.1 percentage points higher than those in urban areas, indicating that the potential for upgrading consumption in rural markets has also been effectively released." Li Qingbin said.

In addition, sales of green intelligent products are growing rapidly. In the first half of the year, the sales of new energy vehicles reached 3.747 million units, a year-on-year increase of 44.1%, accounting for 28.3% of new car sales. The sales of home appliances on major e-commerce platforms such as "trade in old for new" and green smart home appliances going to rural areas increased by 67% and 12.7% respectively year-on-year. Sales of some green organic food and health products on key e-commerce platforms achieved double-digit growth, and smart products such as smart homes and wearable devices are also constantly being popularized.

According to Zou Yunhan, Deputy Director of the Macro Department of the Economic Forecasting Department of the National Information Center, consumer confidence is gradually recovering. "According to a survey by the People's Bank of China, the proportion of residents who chose to 'consume more' in the second quarter has rebounded to 24.5%, marking the second consecutive quarter of recovery."

There is considerable room for medium to long-term growth in consumption

Many interviewed experts have stated that after years of development, China's economic scale has continuously expanded, its comprehensive national strength has been improving, and the income of residents has continued to increase, laying the foundation for the continuous upgrading of consumption structure and the continuous release of consumption potential.

"China has a super large domestic demand market, with the world's largest and most growing middle-income group, nurturing a large demand for consumption upgrading." Guo Liyan, Director of the Situation Department of the Decision Consulting Department of the China Academy of Macroeconomics, believes.

"The continuous expansion of the middle-income group will further strengthen the backbone of consumption growth. The development of new urbanization is conducive to consolidating the foundation of consumption increment. The vigorous development of new formats and models is conducive to stimulating new demand." Zou Yunhan said that both service consumption and commodity consumption in China have enormous potential.

From the perspective of commodity consumption, the growth of key durable goods presents a new trend and stimulates new space.

For example, automobile consumption will accelerate from the stage of first purchase to the stage of increasing demand for replacement purchases. The consumption characteristics of low-frequency, high price, heavy experience, and service in automobile consumption will be more significant. Among them, new energy vehicles will enter a high growth stage driven by the market after crossing the penetration point of 10%.

For example, household appliance consumption will enter a stage where updating consumption is the main focus and purchasing demand is secondary. "For middle-income and above income groups, smart home appliances will become a new direction in the demand for home appliance updates. For rural residents, it has been nearly 10 years since the last round of large-scale home appliance activities ended. With an average lifespan of 8 to 10 years for household appliances, most rural home appliance products have reached the stage of updating and upgrading." said Zou Yunhan.

In addition, home decoration consumption will also usher in a new stage dominated by second-hand house decoration, renovation, and partial renovation. According to the China Building Decoration Association, there are currently 270 million residential units in need of renovation and modification.

From the perspective of service consumption, consumer demand is upgrading towards differentiation, personalization, and diversification. For example, tourism consumption is developing towards the direction of "big tourism", presenting a pattern of equal emphasis on sightseeing tourism and leisure vacation tourism, and the joint development of traditional and new tourism formats.

Expanding consumption still requires sustained policy efforts

"We need to have confidence and patience in the process of consumer recovery after the impact of the epidemic." Li Qingbin believes that currently, the foundation for consumer recovery, especially for further expansion, is still not solid enough, and residents' consumption ability and confidence still need to be strengthened. The next step is to make efforts to improve consumption ability, optimize consumption supply, improve consumption environment, and continue to promote consumption recovery and expansion.

"In the short term, measures such as increasing subsidies and transfer payments to key groups, stabilizing employment and promoting income growth, and reducing the burden of consumption on key categories should be taken to help repair the scar effect caused by the impact of the epidemic on residents, alleviate the problem of insufficient consumption capacity and weak confidence. In the long run, deepening reforms should be carried out to further remove institutional and mechanism obstacles that hinder the release of consumer demand, and continuously enhance the endogenous driving force of consumption growth." said Zou Yunhan.

Not long ago, the National Development and Reform Commission and other departments formulated and issued measures to restore and expand consumption. Experts say that with the implementation and effectiveness of relevant measures, domestic demand is expected to further expand and consumption potential will continue to be unleashed.

——Promote bulk consumption.

Distribute car consumption vouchers and provide car replacement subsidies within a specified period to guide car consumption; Cooperate with online and offline platforms to distribute energy-saving home appliance subsidies, hold home appliance promotion festivals, and encourage home appliance upgrading and consumption; Reducing down payment ratios, lowering mortgage interest rates, increasing provident fund loan quotas, and optimizing real estate market regulation policies according to local conditions... Since the beginning of this year, many places have introduced effective measures to effectively promote bulk consumption.

"Large scale consumption such as automobiles and housing is an important manifestation of high-quality living and a fundamental driving force for consumption growth." Wang Yun, Deputy Director of the Institute of Foreign Economics at the China Academy of Macroeconomics, believes that the "Measures" focus on optimizing the management of automobile purchase and use, supporting the expansion of new energy vehicle consumption, coordinating the promotion of housing purchase and renovation, and improving the consumption level of home decoration and home furnishings. A series of practical and effective measures have been proposed, which will effectively break through bottlenecks and further stabilize large scale consumption.

——Promote new types of consumption.

"In recent years, various regions and departments have focused on guiding and supporting digitalization, intelligence, greenness, high-end, and quality, striving to break through the bottlenecks faced in the development and growth of the new consumer market. Guo Liyan believes that currently, China has achieved a series of results in promoting new consumption, such as the penetration rate of the new energy vehicle market exceeding 30% in the first half of the year, and the continuous connection, expansion, and improvement of new consumption such as intelligent networking. The measures proposed in the" Measures "to strengthen digital consumption and promote green consumption will further explore and unleash the potential of new consumption."

——Digging potential and promoting rural consumption.

"China is a large agricultural country with a huge rural population. In 2022, the rural permanent population reached 490 million, which is an important part of the super large-scale market. However, the consumption potential has not been fully tapped. Guo Chunli, director of the Institute of Economics at the China Academy of Macroeconomics, stated that the" Measures "proposed practical measures such as promoting green products to rural areas, improving rural e-commerce and express logistics distribution systems, promoting characteristic products to cities, and vigorously developing rural tourism. By accelerating the revitalization and attraction of factors to rural areas, strengthening the supply of products and services, and meeting the constantly upgrading consumption needs of rural areas.".